Diageo(US:DEO) Sou Hu Cai Jing·2026-01-12 02:09Core Viewpoint - Diageo is facing significant growth pressures, with declining organic net sales and operating profits, prompting a leadership change as Dave Lewis takes over as CEO to implement cost-cutting and improve profitability [3][4][6]. Financial Performance - In the fiscal year 2024, Diageo's organic net sales decreased by 0.6% year-on-year, and organic operating profit fell by 5% [3]. - For fiscal year 2025, organic net sales saw a slight increase of 1.7%, but organic operating profit still declined by 0.7% [3]. - The first quarter of fiscal year 2026 reported flat organic net sales year-on-year, with weak demand in the Chinese baijiu and U.S. spirits markets cited as major factors [3][11]. Leadership Changes - Debra Crew, the previous CEO, left in July 2025 after two years, with CFO Nik Jhangiani serving as interim CEO until Dave Lewis's appointment [4][6]. - Lewis is recognized for his experience in cost reduction and business transformation, having previously restructured Tesco during a crisis [6][7]. Strategic Initiatives - Diageo plans to cut approximately $625 million in costs over the next three years, with asset disposals being a key strategy since 2025 [7][8]. - The company has been actively selling non-core assets, including stakes in various breweries and brands, to streamline operations [8][11]. Market Challenges - The Asia-Pacific region saw a 7.5% decline in organic net sales in the first quarter of fiscal year 2026, primarily due to weak performance in the Chinese baijiu market, which negatively impacted overall group sales by about 2.5% [11]. - Management emphasizes the need to adapt to changing consumer preferences regarding drinking habits and expectations, indicating a shift in strategic focus [11].