Diageo CEO Dave Lewis targetting cost cuts, staff reductions
Diageo is preparing organisational changes and cost reductions as it seeks to improve competitiveness and deliver sustainable returns for shareholders.
IRELAND – Diageo chief executive Sir Dave Lewis has reportedly instructed senior executives to identify cost savings and reduce expenses as the drinks giant intensifies efforts to improve competitiveness under its turnaround strategy.
According to a report by the Financial Times, citing unnamed sources, Lewis has assigned cost-reduction targets to Diageo’s executive committee rather than specifying a fixed number of job cuts.
One source told the publication that “non-revenue-generating” teams were expected to be most affected, while another described the atmosphere at the company’s London headquarters as resembling a “funeral home”.
The report said details regarding the scale of the workforce reductions are expected to be announced internally next week.
Responding to the reports, a Diageo spokesperson told Just Drinks: “In February, at our interim results, we shared our intention to redesign our operating framework, to drive sustainable returns for shareholders by delivering a more competitive Diageo.”
The spokesperson added: “We will always prioritise informing our colleagues of any organisational changes first and have committed to update shareholders on our progress at a Capital Markets Day on 6 August.”
Since Lewis assumed leadership of the Johnnie Walker owner in January, several senior executives have exited the business, including the regional heads for North America, Great Britain and Africa, as well as the company’s chief human resources officer.
John O’Keefe succeeded former North America president Sally Grimes in April. Last month, Bloomberg reported that Ed Pilkington, chief marketing and innovation officer for Diageo’s North American division, Africa president Hina Nagarajan and chief human resources officer Louise Prashad were also expected to leave the company.
Earlier reports indicated Lewis planned to simplify Diageo’s regional management structure as part of his broader turnaround strategy.
According to unnamed attendees at a town hall meeting cited by Bloomberg, Lewis said the changes would “give greater power to managing directors who should hold more decision-making capabilities for their markets”.
A company spokesperson said at the time: “As the turnaround progresses, we continue to communicate openly with all our Diageo colleagues. We committed to update all stakeholders on our progress during calendar Q3 and this remains our timeline.”
In the third quarter ended March 31, Diageo reported a 0.3% increase in group organic net sales to US$4.5 billion.
The company recorded strong organic sales growth in Europe, Asia and Latin America and the Caribbean, while North American organic net sales declined more than 9% to US$1.71 billion due to “soft market conditions and the need for a more competitive offer.”
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