‘Significant’ squeeze on incomes hitting drinking, warns Guinness maker

Core Viewpoint - Diageo warns that a significant squeeze on disposable income is leading to reduced alcohol consumption in Britain, impacting the company's performance and the pub industry [2][3]. Group 1: Economic Impact on Consumption - Consumers are drinking "fewer servings per occasion," indicating a shift in drinking habits due to economic pressures [3][4]. - Despite the decline in servings, the frequency of drinking spirits increased by 16% last year compared to 2024 [3]. Group 2: Company Performance and Strategy - Diageo reported a 2.8% drop in underlying operating profits to $3.3 billion (£2.4 billion) and a similar decline in underlying sales [6]. - The company has cut its dividend from 40.5 cents per share to 20 cents, reflecting the need for cost-saving measures to address performance issues [6][7]. - Diageo downgraded its full-year sales guidance for the second time in three months, now expecting a decline of 2% to 3% due to ongoing challenges in the US market [8]. Group 3: Leadership and Future Plans - Sir Dave Lewis, the new CEO, emphasizes the need to rebuild relationships with pubs and bars as a priority for the company's turnaround [4]. - An updated strategy for Diageo is expected to be unveiled in the summer, as the company navigates its current challenges [8].