Diageo is now looking to achieve around $625m in cost savings in the next three years, as part of its latest bid to bolster growth.
The change marks a $125m increase from the original $500 in cost-savings plan laid out through Diageo’s ‘Accelerate’ initiative in May.
Go deeper with GlobalData
At the time, then-CFO Nik Jhangiani said the Accelerate plan would see “a shift in how we do business”, including developing a “more agile global operating model”.
Now interim CEO following the departure of Debra Crew last month, Jhangiani said in prepared remarks on Diageo’s full-year 2025 results today (5 August) that the business had “identified further savings since May”.
“Accelerate is not just about cutting costs, it’s also about driving better growth, prioritizing where we invest, and building stronger capabilities,” he said.
Commenting on what the “further savings” might entail, he told reporters the “main areas of focus” were on “trade investment in A&P spend to drive for more efficient and effective spend”.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHe added: “I would actually more focus on the trade investment, the non-working element of our A&P spend, and the commercial A&P, where I truly see, as we talk through commercial execution excellence, we need to link up our investments in a more structured way, through the line.”
The interim chief executive said there would also be “continued focus around supply chain agility”.
When asked whether the cost-savings initiative would include job cuts, he stressed: “Yes, there will be some, but that’s not what this is about. This is about really freeing up resources and dollars where we can reinvest for the business, right?”
He added: “This could ultimately actually be about more numbers in terms of head count, as we look at more feet on the street, for example, including here in our home market.”
Questioned on when Diageo might pick its next official CEO, Jhangiani said he expected a decision approaching “the end of October at the latest”.
For the year ended 30 June 2025, Diageo saw organic adjusted net sales grow 1.7%, or $338m, and decline 0.1% on a reported basis to $20bn.
Reported net profit slid 39.1% to $2.54bn. Adjusted operating profit before exceptional items was down 0.7% at $5.7bn, while reported operating profit dipped 27.8% on the previous year to $4.34bn.
In its 2026 fiscal year, the business said has forecasted organic net sales growth to sit “at a similar level” to 2025, with organic net sales declining “slightly” in the first half of the year.
It also anticipates organic operating profit growth to sit in the “mid-single-digit” range, “skewed to the second half”.
Regional performance
By region, Asia-Pacific was the only market where Diageo booked a dip in organic net sales, which dropped 3.2%. Reported volume however grew 3.7% to 77.7 million equivalent units. Volume was also up 3.9% organically.
The Asia-Pacific market “has been a little more challenging”, Jhangiani told Just Drinks, which he attributed to the the Greater China region, Southeast Asia and “global travel”.
“That comes back to the fact that footfall and travel has been down, and obviously consumers, even there in that environment, are being a little more cautious, right? In terms of their shop,” he said.
Jhangiani noted that Diageo was also seeing competitors “heavily discounting”, which it was not as it looks “to continue to protect and build our brand equities”.
He added that the “activation and love” for Johnnie Walker whisky he had seen in Thailand was “a clear example of where we’re seeing pockets of growth”. He also pointed to the growing buyer and consumer interest in smaller format products in Shanghai.
“I think we’re encouraged by some of the activity, and we need to start leveraging some of those best practices across the markets,” Jhangiani said.
Diageo booked flat growth across its other markets in 2025. In North America, organic net sales were up 1.5% at $8bn, but reported volumes dipped 1.2% to 49.5 million equivalent units. They were down 0.8% in organic terms.
Reported net sales in Europe reached $4.8bn, growing 0.4% on a reported basis and by 0.3% organically.
Jhangiani added that the US and China were “weaker from a consumer environment perspective, and probably pockets of Europe”.
Reflecting on how the group was approaching Europe, he spoke about Diageo’s Southern Europe region, which it had previously managed as one market.
The group has developed individual market teams, Jhangiani explained in his prepared remarks, which are expected to help it “capitalise on these distinct growth opportunities and be more consumer and customer-centric”.
