Diageo's temporary leader pledges to revive the ailing Guinness brewer, aiming for optimal performance.
Diageo Announces "Accelerate" Initiative to Boost Sales and Profitability
Diageo, the global beverage giant, has unveiled a multi-faceted strategy called the "Accelerate" initiative, designed to increase sales and profitability despite economic challenges and a demand slump.
The core of the strategy involves a focus on cost savings and reinvestment. Diageo has raised its cost-saving target from $500 million to $625 million, freeing up capital for reinvestment in growth areas, particularly premium products and digital transformation. This approach includes some job cuts but emphasizes reallocating resources rather than just reducing headcount.
Another key element is advertising and promotional optimization. The company is shifting 14% of its 2025 marketing budget towards consumer-facing activities using AI-driven virtual content studios. This approach tailors global campaigns to local markets efficiently, maintaining brand relevance while controlling costs.
Diageo is also boosting supply chain agility by shifting some production to regions aligned with the US-Mexico-Canada Agreement (USMCA) to reduce tariff exposure, especially in the US and EU markets. The company is also decentralizing operations by creating standalone market teams for greater responsiveness to local consumer trends.
The strategy also includes a focus on growth in key markets and segments. Diageo is expanding its sales presence in the US, where its premium tequila brands and whiskey have underperformed against competitors. The company is also focusing on ready-to-drink (RTD) products in growth markets, adopting a more FMCG-style commercial execution to increase visibility and innovation in liquid and packaging formats.
Despite a 39.1% profit decline in fiscal 2025 and ongoing tariff and economic headwinds, Diageo expects to sustain organic net sales growth at about 1.7% and mid-single-digit operating profit growth in fiscal 2026, with greater growth expected in the second half of the year. The company is cautious about US market pressures and weak consumer confidence globally but leverages strengths such as tequila growth and strategic cost management.
Interim CEO, Nik Jhangiani, admitted that "there is clearly much more to do". The company is exploring ways to improve its offer in lower ABV (alcoholic strength) and 'ready to drink' products, and is also considering some acquisitions.
In summary, Diageo’s new strategies focus on leveraging AI to optimize marketing, improving supply chain resilience against tariffs, decentralizing operations for local agility, and reinvesting cost savings into premiumization and market presence expansion, especially in the US and RTD categories.
Diageo, in an effort to bolster its finance and improve profitability, is reallocating resources and raising cost-saving targets, aiming to invest the freed-up capital in growth areas like premium products and digital transformation. To boost its business, Diageo is also focusing on optimizing its investments in advertising and promotions, using AI technology to create globally tailored campaigns at reduced costs.
