Diageo's stock has seen a dramatic decline, dropping from nearly £90 billion in market value to less than half that amount, largely due to a combination of external pressures like inflation and internal mismanagement, particularly in inventory control. The company experienced a surge in sales during the pandemic, but this growth has since reversed, leading to a profit warning in November 2023.
The departure of former CEO Debra Crew and the appointment of turnaround specialist Dave Lewis signal a shift in strategy. Lewis, known for his decisive cost-cutting measures from his time at Unilever and Tesco, is expected to announce plans that may include further divestitures and a focus on pricing strategies aimed at attracting a broader customer base.
He has indicated that previous strategies under Crew may have alienated some consumers, and he aims to address this by repositioning prices selectively. Additionally, Lewis sees potential in expanding product categories like ready-to-drink cocktails and investing in established brands like Guinness.
The outcome of these strategies is crucial not only for Diageo's shareholders but also for the broader U.K. economy, as the company plays a significant role in food and drink exports