‘There will be some’ job cuts, Diageo confirms
After increasing its cost-saving programme by another US$125 million, Diageo said this was “not about job cuts or elimination of roles” but confirmed “there will be some”.
Yesterday (5 August), Diageo released its full-year fiscal 2025 results, with reported net sales up by 1.7% despite a ‘challenging year’.
Speaking during a media call yesterday (5 August), interim CEO Nik Jhangiani detailed Diageo’s goal to save approximately US$625m over the next three years – US$125m more than the initial US$500m savings target announced in May with the launch of the Accelerate programme.
Through Accelerate, Diageo aims to reach this savings target through smarter reinvestments, optimising A&P (advertising and promotion) spend and leveraging AI-driven content production.
Jhangiani said: “In terms of the increased cost savings to US$625m over the next three years, I think this is just continued work that we’ve been doing since May, as we continue to refine areas where we can unlock more savings opportunities.
“This is really not about job cuts or elimination of roles. Yes, there will be some, but that’s not what this will be about. This is about really freeing up resources and dollars where we can reinvest for the business.
“I would use [the] example, this could actually be about more numbers in terms of head count, as we look at more feet on the street, for example – including here, in our home market, where I think there is a great opportunity to drive, not just Guinness, but more around the spirits growth opportunities we look for as well.”
Jhangiani also said considerations about disposing of “non-core, non-strategic” brands were “moving at pace”. So far this year, Diageo has agreed to sell its Italian operations to NewPrinces, and also sold its Cacique rum brand to La Martiniquaise-Bardinet.
“Very importantly, we’ve got an interested universe of buyers that will allow us to maximise value for Diageo and our shareholders, but obviously put those assets in the right hands, where I think they can continue to grow very well,” Jhangiani added.
‘Firing on far more cylinders’
The interim CEO drew attention to three of the company’s largest global brands: Don Julio Tequila, Johnnie Walker Scotch whisky, and Guinness. He commented: “Typically, Scotch is one of the most adversely impacted categories. In fiscal 26, we’re focused on accelerating Johnnie Walker recruitment through premiumisation and scaling down innovation across the price ladder.”
He continued: “We need to get the business firing on far more cylinders than just these three brands. One opportunity I’ve consistently highlighted to Diageo given my prior experience, is the potential to step up our commercial excellence focus. I want to re-establish Diageo as the partner of choice.
“We will do this through trade-investment optimisation, optimising outlet activations and establishing a clear picture of success and best-in-class standards at the point of purchase.”
Opportunities in non-alcoholic beverages and RTDs will also play a role.
Jhangiani said: “We are the number-one in non-alcoholic ‘spirits’ globally, now over four times the size of the number two player, with a great range of quality, non-alc alternatives.
“Gen Z household penetration of spirits was up six percentage points to 55% in 2024 versus 2020. We believe spirit RTDs have played a role in this as LPA+ [legal-purchasing-age] Gen Z enter TBA [total beverage alcohol] via RTS versus historically coming through beer. So, there’s a huge opportunity for us to accelerate performance across both non-alc offers and RTDs.”
CEO update
Jhangiani stepped into the CEO role temporarily in July following the immediate departure of former CEO Debra Crew, by mutual agreement between Crew and the board.
Asked for an update about the appointment of a CEO, Jhangiani said: “I’ve been here 11 months, and I already have a huge passion for this business and our brands. I’m very humbled to be asked by the board to step in as interim CEO, and currently [I’m] really focused on the best job that I can do.
“The board is moving at speed to make the right decision, and I would expect that probably towards the end of October at the latest, there should be some decision.
“But I will leave that to the board to make their final decision, and I know they’ll do what’s right for Diageo for the long term.”
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