Diageo announced a comprehensive restructuring plan led by newly appointed Chief Executive Dave Lewis, who took the helm last November. The strategy centers on substantially expanding Guinness production capacity while reducing the company’s global workforce by an unspecified amount. Lewis stated that the workforce reductions carry difficult consequences but are necessary for the business, noting that company insiders support the approach.
The restructuring is expected to incur $514 million in employee severance costs and aims to deliver $1 billion in annual savings over two years through a $1.2 billion investment in operational changes. A key component involves increasing Guinness production capacity from 8.2 million hectolitres to 15.7 million hectolitres by 2031, equivalent to roughly 300 Olympic-sized swimming pools of additional annual production. This expansion supports plans to drive global Guinness sales, particularly in North America, and prevent supply shortages.
Lewis also signaled a strategic pivot away from the company’s recent focus on premium brands toward a broader portfolio approach. Diageo plans to develop offerings in mid-market segments and smaller package sizes to appeal to cost-conscious consumers, while also addressing its underperformance in the ready-to-drink category such as pre-made cocktails. The company stated it is not actively pursuing asset sales or acquisitions, instead focusing on improving its existing business operations.
Diageo reported annual pre-tax profit declined 26 percent to $2.6 billion, with sales falling 2 percent to $19.6 billion amid continued weakness in China and the United States. The operating profit of $5.7 billion, excluding one-off charges and restructuring costs, slightly exceeded analyst expectations. Share prices rose more than 6 percent following the announcement, reflecting investor confidence in the turnaround strategy’s early direction.
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