This is a serious signal for the industry. If the global market leader is revising its strategy, it means the slowdown in demand is no longer a “temporary problem.”
New CEO Dave Lewis stated that Diageo expects only low organic sales growth through fiscal year 2029. Until recently, the company was confident it could grow twice as fast, according to Euronews.
To adapt to the new conditions, the maker of Johnnie Walker, Smirnoff, Guinness, Baileys, and Captain Morgan will cut costs by $1 billion over three years. The company intends to allocate these funds toward brand development, new products, and more competitive pricing. The restructuring program will cost $1.2 billion, with most of these costs already reflected in the financial statements.
Investors viewed the shift as a sign that management has stopped banking on a rapid market recovery. Following the announcement of the new strategy, Diageo’s stock jumped by more than 7%.
The company has not yet disclosed the extent of the workforce reductions. However, Reuters reported that the changes will primarily affect administrative departments, where there has been an accumulation of overlapping functions between global and regional offices. In some teams, the number of employees could be reduced by 20–30%.
Diageo’s challenges reflect the situation across the entire industry. Since the pandemic, consumers have been buying expensive alcohol less frequently, and some younger consumers are switching to low-alcohol and non-alcoholic beverages. The research firm IWSR forecasts that global consumption of beer, wine, and spirits will continue to decline at least through 2035.
According to IWSR, in 2025, sales value fell by 4% across the 22 largest markets, which account for about 75% of global alcohol consumption. The spirits segment was hit hardest: including Chinese baijiu, sales value fell by 9%; excluding national spirits, it fell by approximately 1%. In the U.S., manufacturers’ sales of spirits declined by $814 million, to $36.4 billion.
In volume terms, the market lost about 500 million 9-liter cases, or approximately 4.5 billion 0.7-liter bottles.
It should be noted that Diageo is the world’s largest producer of spirits. The company operates in nearly 180 countries. Its revenue for fiscal year 2025 decreased by 3%, to $19.64 billion.
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