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"Increased interest in abstaining from alcohol, known as 'Sober Curious' movement, causes a surge in demand for non-alcoholic beverages, as per the latest Diageo CEO's caution"

Diageo's acting CEO, Nik Jhangiani (depicted), conceded that Guinness's parent company would necessitate reducing workforce to accumulate an additional £94 million through cost-saving measures.

"The increased interest in abstaining from alcohol, known as 'Sober Curious', is causing a surge in...
"The increased interest in abstaining from alcohol, known as 'Sober Curious', is causing a surge in demand for non-alcoholic beverages, according to the latest Diageo CEO."

"Increased interest in abstaining from alcohol, known as 'Sober Curious' movement, causes a surge in demand for non-alcoholic beverages, as per the latest Diageo CEO's caution"

Diageo Announces Cost-Cutting Measures and Strategic Shifts

Diageo, the world's leading spirits company, has reported a 27.8% drop in profits to £3.2 billion for the year to June, marking a significant decline from the previous year's £4.5 billion. In response, the company has announced a series of cost-saving measures and strategic shifts aimed at regaining market share and boosting profits.

As part of these measures, Diageo plans to cut jobs, with the goal of saving an additional £94 million. This move is part of a broader strategic transformation outlined in its Accelerate programme, which focuses on cost savings, operational efficiency, premium brand focus, portfolio optimization, innovation, sustainability, and market share gains.

Under the Accelerate programme, Diageo aims to achieve $625 million in cost savings over three years, with the savings reinvested in premium brands to drive growth. The company is concentrating on premium brands like Don Julio and Guinness, which have shown double-digit growth in 2025.

Diageo is also exiting underperforming brands like Cîroc in North America, allowing the company to concentrate resources on more successful brands. The focus is on enhancing Diageo's portfolio by investing in brands that align with consumer trends and preferences, potentially including lower alcohol products if they fit within the company's premiumization strategy.

The company is leveraging digital tools like CreativeX and EDGE365 to enhance its competitive edge in the market. Diageo also plans to invest $1 billion in sustainability initiatives by 2030, which may include efforts to align with consumer demand for healthier or more responsible consumption options.

Diageo has gained or held market share in 65% of its total net sales in measured markets, indicating some success in its current strategies. The company is now exploring opportunities to improve its offer in lower alcohol and 'ready to drink' products, as well as sharpening its strategy to improve the performance of its entire portfolio.

Despite the challenges, including tariffs and weak demand in key markets like the US and China, Diageo's interim CEO, Nik Jhangiani, expressed optimism about reviving sales. He attributed the decline in sales to consumer wallet pressure and pledged to increase cost savings to £470 million over the next three years. Jhangiani admitted there was 'clearly much more to do' to improve Diageo's performance but expressed confidence in the company's ability to adapt to changing consumer preferences.

Matt Dorset at Quilter Cheviot believes Diageo's market leading brands will be crucial for its performance until a new CEO sets a strategic direction. Jhangiani is monitoring changes in consumer behavior, including the trend of moderation, and is committed to understanding and adapting to these shifts.

Investors responded positively to the announcement, with Diageo's shares surging 4.9% following the announcement of cost-cutting measures and strategic improvements. Consumers who are moderating are not necessarily socializing less, according to Jhangiani, suggesting that Diageo's strategies to cater to this trend could be key to its future success.

References:

  1. Diageo's Accelerate programme
  2. Diageo's 2021 Annual Report and Accounts
  3. Diageo's Q3 2022 Trading Update
  4. To boost their personal-finance, some investors are looking to invest in Diageo's stocks, given the company's strategies to save costs and reinvest in premium brands like Don Julio and Guinness through its Accelerate programme.
  5. As part of Diageo's commitment to sustainability, the company plans to invest $1 billion in environmentally friendly initiatives over the next decade, with the intention of creating products that align with consumer demand for healthier or more responsible consumption options.
  6. In pursuit of cost savings and strategic transformations, Diageo has announced a series of measures, including job cuts, portfolio optimization, and a focus on innovation, all aimed at improving the company's business performance and returning to profit growth in the near future.

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