Diageo has announced a new $1.2bn restructuring programme following a year of declining sales.
The drinks giant plans behind brands including Guinness, Smirnoff and Johnnie Walker said it would overhaul its operating framework and review its supply chain model to deliver $1bn in cost savings over the next three years. The new operating framework will bring in $850m in savings, with a further $150m coming from supply chain initiatives.
“These savings are significant. They’re very important as we chart the turnaround of Diageo,” chief executive Dave Lewis said. “They will allow us to invest in innovation selectively where we need to improve our competitiveness, but they also allow us to do so without needing to reduce the operating profit.”
The announcement comes after Diageo recorded a 2% decline in organic sales, to $19.6bn, in the year ended 30 June 2026, slightly ahead of the 2.1% decline forecast by analysts. Operating profits before exceptional items, meanwhile, climbed by 2% organically to $5.6bn, thanks to cost savings from Diageo’s previous cost savings programme Accelerate.
“Fiscal 26 has been a mixed year with good momentum in Europe, Latin America and Africa but with the challenges in North America and Asia Pacific that we’ve talked about through the year,” said Diageo CFO Nik Jhangiani.
In North America, Diageo’s sales fell by a hefty 8.4% organically, driven by a 21% decline in tequila sales. Europe, however, saw sales climb 3%, thanks to double-digit growth for Guinness in Great Britain.
The full-year results also included $2.4bn in exceptional operating charges. Some $1.5bn in impairment charges related to hyperinflation in Turkey and writedowns to the Don Papa brand, while a further $900m in restructuring costs from Accelerate were also recorded. Taking these into account, Diageo’s operating profits fell 27% to $3.2bn.
Accelerate had delivered $540m in cost savings for Diageo in FY26, Jhangiani revealed.
Savings had mostly come from “a focus on driving efficiency and effectiveness from A&P investment, supply and overheads, he said, adding Accelerate would now be closed off and replaced by the new two-year restructuring programme.
No detail was given on the scale of layoffs at Diageo as a result of Accelerate and the new, unnamed restructuring programme. Some Diageo teams are cutting around 20% to 30% of their staff, according to a recent report by Reuters.
“A restructuring programme of this size obviously has very significant impacts on Diageo colleagues,” said Lewis. “I’d like to put on the record, my deep appreciation for the way that Diageo colleagues have engaged with this change programme, most of which has been communicated throughout the business a month or so ago.”
Looking forward, Diageo said it expected to report flat organic net sales growth in FY27, with North America organic net sales down by “mid-single-digits”. Organic operating profit growth, meanwhile, would increase by “low -to mid-single-digits”.
Diageo shares climbed 6.6% immediately following the release of its FY26 results.
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