Guinness owner Diageo eyes £471m in cost savings after sales dip

Guinness owner Diageo is to ramp up its cost-savings programme after a “challenging” year for the business which saw the departure of its chief executive.

The drinks giant saw operating profit slide 27.8% in the year ending 30 June 2025, which it blamed on restructuring costs, unfavourable foreign exchange rates and tightening margins. Net sales also slipped by 0.1% to £15.2b.

As a result, the owner of Johnnie Walker and Casamigos said it was looking to make around £471m in cost savings, up from a previous target of £377m.

It follows a turbulent period for the business, which saw chief executive Debra Crew depart last month by ‘mutual agreement’. Chief financial officer Nik Jhangiani has taken on the role on an interim basis.

He said Diageo’s results reflected a “challenging year”, but pointed to a “standout performance” by the Don Julio, Guinness and Crown Royal Blackberry brands.

“There is clearly much more to do across our broader portfolio and brands,” said Jhangiani.

“We recognise the need to drive meaningful growth opportunities in an evolving total beverage alcohol (TBA) landscape, and we are sharpening our strategy to accelerate growth.

Jhangiani added: “While macroeconomic uncertainty and the resulting pressure on consumers continues to weigh on the spirits sector, we believe in the attractive long-term fundamentals of our industry and in our ability to continue to outperform as the TBA landscape evolves. We are focused on what we can manage and control and executing at pace. The board and management are committed to delivering improved financial performance and stronger shareholder returns on a sustained basis.”

Diageo expects its fiscal 2026 organic sales growth to be similar to this year, with operating profit growth predicted to be mid-single-digit, including the impact of current tariff rates.

In May, Diageo warned that if the 10% US tariff on UK and European imports remains, it will cost the company an estimated £112m per year.

Earlier this year, the company ruled out a sale of its Guinness brand following speculation it could offload its famous stout in a bid to revive growth. Around the same time it sold Cacique, the rum brand it has owned since 2003, to French spirits group La Martiniquaise-Bardinet.

In July last year, the company also sold its Safari liqueur to Portuguese drinks group Casa Redondo, while in November it created the Diageo Luxury Company, to refocus on the luxury sector.

Diageo owns more than 200 drinks brands, including Baileys, Smirnoff and Captain Morgan.