Diageo Expands £625m Cost-Cutting Plan After 28% Profit Drop

Diageo, the world's largest spirits company known for brands like Guinness and Johnnie Walker, reported a nearly 28% drop in operating profits for the year ending June 2025 amid weaker consumer demand and supply constraints, particularly in Britain. In response, the company has expanded its cost-saving target to £625 million from £500 million, aiming to achieve these savings over three years through advertising efficiencies, overhead reductions, and supply chain improvements. Interim CEO Nik Jhangiani emphasized that while some job cuts are expected, the overall workforce may still grow, highlighting investments in sales and marketing, including increased use of AI for content creation. The firm is also managing the impact of ongoing US tariffs on UK and EU spirits imports, which it expects will reduce operating profits by $200 million but believes it can mitigate about half of this effect through contingency planning. The leadership change followed investor concerns over Diageo's declining share price, with former CEO Debra Crew stepping down by mutual agreement. Despite the challenges, Diageo remains optimistic about the long-term fundamentals of the spirits industry and its ability to adapt to evolving market conditions.