Diageo implements major turnaround and cost-cutting strategy

Diageo is implementing a major turnaround strategy led by CEO Sir Dave Lewis to combat declining sales and rising costs. The company has launched a significant cost-cutting initiative, with targets aiming for approximately $1 billion in savings over two years. This restructuring includes operational and supply chain efficiencies, though it has already resulted in job losses, including nearly 1,000 positions in Africa.

To align leadership with shareholder interests, the board has proposed a long-term incentive scheme for Lewis. This plan could allow him to claim up to £15 million by 2029, contingent upon a 50% increase in the company’s share price. While the strategy aims to restore margins and premiumise the portfolio, the company faces near-term headwinds, including slumping volumes in key markets and restructuring costs that may temporarily impact free cash flow.