Johnnie Walker maker Diageo is preparing a major restructuring exercise under newly appointed CEO Dave Lewis, according to a report by the Financial Times. As reported by the Financial Times, Mr Lewis has instructed senior executives to identify cost-saving measures, including potential reductions in headcount, as he begins a broader restructuring of the global spirits company. The report cited people familiar with the matter, noting that Mr Lewis has asked executives across the organisation to cut costs as the company seeks to address operational challenges and improve performance. The restructuring is specifically aimed at boosting profitability and offsetting sluggish U.S. sales, demonstrating the urgency of the company's strategic initiatives. Recent developments show the company's London head office has taken on a 'funeral home atmosphere' as the layoff process advances.
According to the Financial Times report, Mr Lewis has assigned cost-reduction targets to members of Diageo's executive committee, rather than specifying a fixed number of jobs to be eliminated. The report stated that executives have been tasked with meeting savings goals, with details regarding the scale of potential job losses expected to be communicated internally as early as next week. Mr Lewis earned the nickname 'Drastic Dave' during his previous leadership roles at Tesco and Unilever due to his aggressive cost-cutting strategies. The current cost-cutting programme represents a significant escalation from previous efforts, with the company targeting deep cuts across underperforming units to free resources for reinvestment. As reported by the Financial Times, layoffs are expected to fall more heavily on non-revenue-generating functions as the company seeks to streamline operations and improve performance.
Since Lewis joined as CEO six months ago, Diageo has experienced significant leadership turnover across key regions. As reported by the Financial Times, the company's heads of Great Britain, North American, and Africa have all left or are currently in the process of leaving the company. Its head of human resources also departed during this period. To address this leadership gap, Diageo has replaced the head of domestic business with Marc Woodward, Lewis's former U.K. chief at Unilever. The company employs around 30,000 people worldwide, making the potential job cuts significant for the global spirits industry. An internal announcement about the scale of the job losses will be made next week, according to sources cited by the Financial Times.
The leadership changes and restructuring efforts come as Diageo attempts to address weaker demand in several markets. As reported by the Financial Times, Mr Lewis said the company had already begun taking steps to tackle sluggish sales in North America, its largest market, describing the region as Diageo's 'biggest challenge'. Among the measures introduced were price reductions on selected tequila brands, including Casamigos, as the company seeks to attract consumers and strengthen sales momentum. The company is also facing challenges from changing consumer habits, with declining demand for alcoholic beverages due to Gen Z's preference for non-alcoholic options and increased use of weight loss drugs affecting alcohol sales.
Responding to the Financial Times report, Diageo did not directly comment on the reported job cuts but reiterated plans it had previously outlined earlier this year. According to the company's statement to Reuters, in February, they shared their intention to redesign their operating model to improve competitiveness and deliver sustainable returns. The company noted that investors would receive an update on the initiative during its Capital Markets Day scheduled for August 6. The restructuring is part of a broader effort to strengthen the business beyond North America, with Mr Lewis having undertaken 'fundamental' work to improve the company's global competitiveness. An internal announcement about the scale of the job losses will be made next week, according to sources cited by the Financial Times.
The reported cost-cutting programme is expected to form part of a wider strategy as the company looks to streamline operations, improve efficiency and position itself for long-term growth. As reported by the Financial Times, Mr Lewis also said Diageo had undertaken 'fundamental' work to improve its competitiveness globally, signalling a broader effort to strengthen the business beyond North America. While the exact scale of any workforce reductions remains unclear, investors and employees are likely to watch closely for further details in the coming weeks, particularly ahead of Diageo's August investor presentation. The company's stock has dropped nearly 60% since 2021, mainly due to reduced alcohol consumption post-pandemic and broader macroeconomic pressures, highlighting the urgency of these strategic initiatives.
