Diageo begins restructuring as executives face job-cut targets

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Diageo restructuring and job cuts

Highlights

Diageo executives have been assigned cost- and headcount-reduction targets as part of a restructuring, with internal job-loss details expected next week.
Leadership changes continue, with regional heads departing and Unilever UK's Marc Woodward hired, while CEO Debra Lewis pursues competitive pricing and affordability via new ready-to-drink products.
Diageo shares have fallen over 60 percent from their 2022 peak of 40 pounds to about 15 pounds amid sectorwide demand declines and concerns over health-driven, structural consumption shifts.

Cost-cutting plan takes shape

As first reported by the Financial Times, Lewis has instructed Diageo's top executives to reduce headcount and other costs in their departments as part of a broad overhaul of the business.

People familiar with the matter say members of the executive committee receive cost-reduction targets rather than a fixed number of roles to remove. One person says non-revenue-generating teams are expected to bear the brunt of the lay-offs, while two people say an internal announcement on the scale of the job losses is due next week.

Diageo employs close to 30,000 people worldwide. In February, the company says it intends to redesign its operating framework to deliver more competitive performance and sustainable returns for shareholders, and it says it will update investors at a Capital Markets Day on 6 August.

Pressure builds across spirits market

Leadership changes are already under way across the group since Lewis arrived, with the heads of Great Britain, North America and Africa having left or being in the process of leaving, alongside the head of human resources. Diageo has also hired Unilever UK chief Marc Woodward, a former colleague of Lewis, to lead its domestic business.

Investors are still waiting for fuller detail on how Lewis plans to revive the FTSE 100 company after a sharp slump in spirits consumption over recent years. He previously signals a willingness to cut prices to win back consumers, a break from Diageo's long emphasis on premium brands, and in May he announces a strategic push into ready-to-drink canned cocktails aimed at broadening the portfolio with more affordable options.

The wider spirits industry is still struggling to recover from a multiyear sales decline after aggressive price rises during the pandemic-era consumption boom. Concerns are growing that weaker demand reflects a structural shift as more health-conscious consumers reduce alcohol intake, and Diageo's shares are down more than 60 per cent from their 2022 peak of 40 pounds to about 15 pounds.

Our earlier article covered Robinhood’s rally after the company announced a 10% workforce reduction aimed at streamlining operations, alongside continued strong trading activity. We also noted that bullish technical momentum supported the move, while some indicators flagged overbought conditions and the risk of a short-term pullback.

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