Diageo's Bold Plan: Cost Cuts, Asset Sales, and a Focus on Iconic Brands

Diageo plans to reduce costs and sell assets by 2028, aiming to decrease its debt and enhance performance. The company intends to cut $500 million in costs, focusing on trade investments and advertising. Despite challenging markets, Diageo's focus remains on its key brands, notably Guinness.

On Monday, Diageo announced an ambitious strategy to slash $500 million in costs and engage in significant asset sales by 2028. This move comes as the well-known producer of Johnnie Walker whisky and Guinness beer seeks to improve its financial standing and reduce debt levels.

Finance Chief Nik Jhangiani addressed investors, stating the cost reductions will target trade investments, advertising, overheads, and the supply chain, while the company retains iconic brands like Guinness. These efforts aim to reduce Diageo's leverage ratio and enhance cash flow by 2026.

While the plan steers clear of mass layoffs, slow hiring and minor workforce adjustments are anticipated. Despite stock fluctuations, the strategy received a generally positive response from investors. Diageo continues to face challenges, including tariffs, yet reported robust third-quarter organic sales growth.

(With inputs from agencies.)