Drinks giant Diageo has reported a 28 per cent drop in operating profit for the year ending June 2025, as it ramps up cost-cutting efforts and begins the search for a new chief executive following Debra Crew’s sudden departure.
The FTSE 100 firm, behind leading brands such as Guinness, Johnnie Walker, Gordon’s, and Smirnoff, posted the decline amid ongoing investor pressure linked to its weakening share price.
In response, Diageo has raised its cost-saving target from £500 million to £625 million. However, interim CEO Nik Jhangiani clarified that the expanded savings plan is “not about job cuts”, suggesting the company may still grow its overall headcount despite some role reductions.
Diageo’s woes have been compounded by external pressures, including a projected £150 million annual impact from Donald Trump’s new tariffs on alcohol imports. The tariffs — 10 per cent on UK spirits and 15 per cent on EU products — took effect on 30 June and 7 August respectively, under a suite of reciprocal trade measures by the White House.
In response, Diageo said it has been executing contingency plans, including supply chain reallocation, inventory management, and investment adjustments. The company expects to offset around half of the profit impact from the tariffs.
Despite the overall downturn, Jhangiani highlighted bright spots in the portfolio, citing strong growth for Guinness, Don Julio tequila, and Crown Royal Blackberry. However, he acknowledged, “There is clearly much more to do across our broader portfolio and brands.”
Changing consumer habits and the cost-of-living crisis have also weighed heavily on Diageo’s performance, with younger drinkers shifting away from traditional spirits and some consumers opting for lower-cost alternatives.
Nik Jhangiani, Interim Chief Executive commented, ""We recognise the need to drive meaningful growth opportunities in an evolving TBA landscape, and we are sharpening our strategy to accelerate growth.
"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."