Diageo, the world-renowned spirits producer behind brands such as Guinness, Johnnie Walker whisky, and Gordon’s gin, has announced a significant escalation in its cost-saving target to £625million over the next three years.
This is an increase from a previous goal of £500million, as the company grapples with profit declines and a notable shift in the consumer landscape.
The interim head of Diageo, Nik Jhangiani, shared that the drive for savings is not primarily about job cuts – though he conceded that “some” roles could be affected – but rather about doing “more with what we have.”
The cost-cutting programme is expected to be delivered through greater efficiency in advertising and promotion, reduced overheads, and improvements throughout the supply chain.
This strategic move follows what Jhangiani described as a “challenging year” marked by falling group profit, shifting drinking habits among younger consumers, and the sudden resignation of former chief executive Debra Crew.
The company is now seeking both a new chief executive and finance head, signalling a period of major transition at the very top.
Diageo’s latest financial results revealed that net sales dropped by 0.1%, settling at $20.2billion (£15.8billion), despite a modest rise in organic sales of 1.7%. Meanwhile, operating profits nosedived by 27.8% to $4.33billion (£3.3billion).
Notably, Great Britain bucked the wider European trend with a 6.7% increase in net sales – largely due to continued strong demand for Guinness – although even here supply issues and changing demographics posed challenges for the company.
Looking ahead, Diageo expects only modest sales growth in the coming year, with company statements pointing to continued macroeconomic uncertainty, cautious consumer spending, and the lingering effects of global tariffs.
While organic sales growth is anticipated to be in line with the 1.7% recorded last fiscal year, Diageo’s intensified focus on cost discipline underlines its commitment to stabilising finances and returning to consistent shareholder returns as its new leadership team takes shape.
