Diageo slashed its full-year sales and profit forecast last week, with shares sliding to their lowest in 10 years.
Organic net sales were flat in the first quarter with organic volume growth of 2.9% offset by negative price/mix of 2.8%. The drinks giant cited weaker results in China and the US.
Nik Jhangiani – who was acting as CEO at the time – expressed the business’s disappointment in the results.
“Net sales were flat organically in Q1, with growth in Europe, LAC and Africa offset by weakness in Chinese white spirits and a softer US consumer environment than planned for,” he said.
“We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment.”
Investment firm AJ Bell noted that the worry for markets will be that the drinks group’s performance implies a shift in drinking habits and/or “diminished appeal” of its key brands rather than a reflection of a tough economic climate.
The company has been facing tougher times since the passing of the late CEO Ivan Menezes in 2023. Debra Crew, who replaced Menezes, stepped down earlier this year by ‘mutual agreement’ after a profit warning prompted its share price to quickly plummet.
“The profit warning was the final straw, and it was clear that Debra Crew had lost the board’s confidence,” Julian Wilds, director at Wilkin Chapman Rollits, told Food Manufacture.
“Diageo sales have been disappointing for some time, which can only be partly blamed on market conditions. Debra Crew’s poor interaction with the market will not have helped her cause and Lewis will have a much stronger rapport with shareholders.”
The fiscal update came shortly before the announcement of Sir David Lewis as its new chief executive officer, with Jhangiani set to return to his role as CFO.
Since Lewis’ appointment Diageo shares have seen positive movement.
Who is Sir David Lewis?
Lewis has a track record of leading global consumer businesses, growing leading brands, and providing operational financial rigour.
He was group CEO of Tesco between 2014 and 2020, where he was recognised for transforming the business.
Prior to this he spent nearly three decades at Unilever, latterly in executive committee roles, leading on both marketing and business performance. It was during his time at Unilever that he earned the nickname ‘Drastic Dave’.
Lewis is also the chair of Haleon, a global leader in consumer healthcare, since its creation in 2022 and a non-executive board director of PepsiCo Inc. He will be stepping down from the Haleon role on 31 December 2025.
Offering further insight into his moniker, Wilds said: “This goes back to some significant cost-cutting during Lewis’s time at Unilever. In any large multinational like Unilever or Diageo there will always be layers of cost to be taken out and it is certain that Lewis will get into that soon after he starts in January. Diageo is a good business which has lacked the decisive leadership which it will now get. This is a very positive appointment.”
Mark Field, CEO of Prof Consulting Group, described Lewis as an industry leader, well respected for cost control and driving customer focused outcomes. He says we can expect to see “razor focus” from the new CEO to improve overall brand health by releasing funds for brand building and investing in price across the on trade and retail offers.
Field added that we can expect Lewis to take the opportunity to dive into what the suppliers, its team and its customers want – and make a quick decision on how to make an “almost immediate impact”.
‘Shares will bounce back strongly’
Commenting on the 6.6% jump in Diageo shares on Monday (10 November 2025), Wilds said: “The shares will bounce back strongly. Dave Lewis’s appointment will be seen as quite a coup for Diageo, and the market will react well to such a high-profile appointment of someone well known to the City from his time at Unilever and Tesco.
“In this situation, it is vital to appoint someone who has shareholder confidence and, given Lewis’s time at the helm in Tesco, when the retailer went through a tough period 2014-2020, he will be seen as just the right man for the job.”
“He is a very bright bloke, and shall bring, I suspect, world class thinking to the topic of optimising Diageo’s portfolio,” added vice chairman of Shore Capital, Clive Black.
“Big questions will naturally revolve around Guinness, which is undergoing quite a renaissance, whilst how the firm evolves around whiskey/whisky and other spirits remains to be seen. He will bring added value to this party though.
“The stock market has responded to the great brand, high calibre and strong positive potential that Dave Lewis brings.”