Debra Crew is expected to evolve, not revolutionise, his strategy

In King Charles’ first New Year’s Honours list, Diageo chief Ivan Menezes was knighted for services to business and equality.

His services to Diageo shareholders haven’t been too shabby, either. Menezes has presided over a decade of strong growth, despite a rocky start.

Last week, it emerged Menezes would retire at the end of June after 10 years at the helm at the spirits giant. Stepping in at the top will be Debra Crew.

Her approach will have ramifications both internationally and for the UK. Although very much a global concern, Diageo is a vital component of UK plc – responsible for £1 in every £10 of food and drink exports.

Experts believe she is likely to evolve the successful strategy of Menezes, rather than change the direction of the business.

Menezes had a tough start to his leadership in 2003. Diageo’s share price and sales growth soon went backwards, as the group suffered the fallout of from a crackdown on gifts to officials in China.

He also had a tough act to follow in Paul Walsh. The former CEO of 13 years was widely feted for creating the modern Diageo by selling off its food business to focus on drinks.


Ivan Menezes, who took over at Diageo in 2003, focused on premium spirits and resisted pressure to sell the Guinness beer business

Menezes decided on a less dramatic strategy: to focus on premium spirits, while resisting more radical action to find shareholder value, such as selling off its Guinness brand.

That decision has been thoroughly vindicated by Diageo’s continued growth. Sales have risen from around £10.3bn back in 2014 to £15.5bn last year, while its shares are up 127% over the past decade, against the FTSE 100’s 17% growth.

In particular, Menezes has been hailed for Diageo’s hugely successful push in tequila – making it the world’s biggest player in the growing category – via heavy investment in acquiring Jose Cuervo and George Clooney’s Casamigos brand.

Diageo also came out of the pandemic notably unscathed. To mitigate lost revenues in bars and restaurants, it successfully pivoted to marketing at-home cocktail consumption.

Bernstein’s Trevor Stirling notes Menezes has “been relentless in pursuing organisational efficiencies, which have been reinvested into increased advertising and promotional spend and dramatically increased the effectiveness of this A&P through the embrace of digital”.

A new era

New CEO Debra Crew, whose consumer goods experience spans Reynolds American, PepsiCo, Kraft Foods, Nestlé and Mars, had already been tipped to succeed Menezes.

“This has been amongst the most orderly succession planning we can remember in consumer staples,” says James Edwardes Jones of RBC.

That’s indicated by Diageo’s share price barely moving on the announcement.

Set to become arguably the UK’s and fmcg industry’s highest profile female CEO, Crew’s previous experience gives a taste of what is to come.

In the context of Diageo, she has already managed its biggest market of North America.

And on a wider level, her tobacco background could also be crucial in helping Diageo navigate an uncertain regulatory environment for alcohol – including ad bans, minimum pricing and export duties.

City analyst Simon Hales says her appointment indicates a strategy “of evolution, not revolution, for now”, while AJ Bell’s Russ Mould says it “theoretically lowers the chances of a radical shift in strategy”.

But she could face growing pressure to change direction. The cost of living crisis and soaring global inflation are prompting questions over the premium branded strategies of even the biggest consumer goods players.

Diageo is targeting 5%-7% organic sales growth, with organic EBIT growth of 6%-9% – which means continuing to push consumers to its more premium portfolio.

This could be tough. In January, the group reported slowing growth and volume declines in its key North American market. Its share price was dented by concerns that inflation was finally affecting consumer behaviour in the resilient spirits category.

At the time, Menezes declared himself “confident in the resilience of our business and our ability to navigate volatility”.

If that confidence is a rare misstep, Crew’s honeymoon period may prove short.