Diageo caretaker boss vows to get struggling Guinness maker 'firing on cylinders'
Interim chief executive Nik Jhangiani on Tuesday admitted the Guinness maker would make some job cuts as it ramps up cost savings by £94million.
But he insisted the FTSE 100 giant could eventually cash in on a trend for drinking in 'moderation' as profits slid 27.8 per cent to £3.24billion, tumbling further than analysts had predicted.
Sales fell 0.1 per cent to £15.20billion in the year to 30 June as Jhangiani said 'the consumer wallet is under pressure'.
But the group singled out a 'standout performance' from Don Julio tequila, and Crown Royal Blackberry whisky, as well as its best-known Guinness.
Jhangiani, who took on the job last month after the sudden exit of its former chief executive Debra Crew, admitted that 'there is clearly much more to do'.
He announced the business would increase its cost savings target to £470million over the next three years, up from £376million.
This would include 'some' job cuts, he admitted, but said the programme was 'not really about job cuts or elimination of roles'.
'This could ultimately actually be about more numbers in terms of head count, as we look at more feet on the street, for example, including here in our home market,' he added.
Diageo has been hit by a cocktail of challenges including US tariffs and weak demand in key markets like the US and China.
But its boss insisted there were opportunities to revive sales by 'sharpening our strategy to get the whole portfolio firing on all cylinders'.
He said: 'We're monitoring changes in consumer behaviour, including moderation, which we see as potential opportunity, not simply a headwind.
'Consumers who are moderating are not socialising any less across a broad range of occasions.'
As more drinkers opt for a so-called sober curious lifestyle, the group will explore how to improve its offer in lower ABV (alcoholic strength) and 'ready to drink' products.
He also said there were opportunities to appeal to consumers who were focused on 'portion control, calorie control'.
These remarks follow bakery chain Greggs saying it is trying to entice customers who are on so-called 'fat jabs', despite their reduced appetites.
Jhangiani said this could also include some acquisitions but that the group was pushing ahead with plans to shrink its portfolio by ditching some 'non-core' brands.
He added: 'We are focused on what we can manage and control and executing at pace.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
26 minutes ago
- Reuters
Rivian's loss bigger than expected as rare earth curbs raise costs, credits fade
Aug 5 (Reuters) - Rivian Automotive (RIVN.O), opens new tab reported a higher-than-expected quarterly loss on Tuesday as disruption in supply of rare earth metals used to make parts of its electric vehicles raised costs and income from credits sold to traditional automakers dwindled. Shares of the automaker fell nearly 5% in trading after the bell. China's curbs on the export of heavy rare earth metals —essential components for motors — sharply increased material costs and disrupted supply chains, driving up the cost of EV production in the U.S. Rivian's cost of revenue for each vehicle produced rose about 8% to $118,375 per unit sold from a year earlier, according to Reuters calculations. "That's really reflecting a much lower production volume, which was largely driven because of challenges we had within our supply base as a result of a lot of the changes in policy," CEO RJ Scaringe told Reuters. "Therefore, our costs look higher, but it's not as if our bill of materials grew or as if we became operationally less efficient." Rivian will shut down production for three weeks in September, after a one-week pause in the second quarter, to integrate key components and prepare for the launch of the R2 SUV next year. The company reported an adjusted loss per share of 80 cents for the second quarter, compared with analysts' average estimate of 65 cents, according to data compiled by LSEG. Rivian also flagged a bigger adjusted core loss this year, expecting it to be between $2 billion and $2.25 billion, compared with $1.7 billion to $1.9 billion previously forecast. The company largely blamed a tapering in the value of U.S. regulatory credits for the higher loss estimate. The elimination of penalties for automakers not meeting fuel economy standards by President Donald Trump's administration has drastically reduced demand for regulatory credits, which companies like Rivian previously sold to traditional automakers to help them avoid emissions fines. Meanwhile, Lucid (LCID.O), opens new tab cut its annual production forecast and missed Wall Street estimates for quarterly revenue as trade tensions took a toll on demand. The luxury EV maker's shares slid more than 7% in extended trading after the company also said it had issues with the supply of magnets, but had resolved it by using substitutes. The $7,500 federal EV tax credit expires at the end of September, eliminating a key competitive advantage that has driven demand, but analysts anticipate a surge in third-quarter sales as customers rush to make purchases before losing access to the incentive. Rivian said on Tuesday it expected record deliveries in the third quarter across its consumer and commercial segments. The Amazon-backed company's revenue for the second quarter stood at $1.3 billion, surpassing analysts' average estimate of $1.28 billion, according to data compiled by LSEG. Rivian delivered 10,661 vehicles in the second quarter, marking a 22% decline from the same period a year earlier, as the company limited production to prepare for its 2026 model year launch.
The Sun
29 minutes ago
- The Sun
Rachel Reeves must find £50billion in next Budget to keep Britain's finances in check, warn experts
RACHEL Reeves must find £50billion in her autumn Budget to keep the country's finances in check, experts warn. The shortfall is the equivalent of raising income tax by 5p for both basic and higher-rate earners, they say today. 1 The Chancellor has to raise taxes or cut spending to maintain her stated financial cushion of £9.9billion by the end of the decade, according to the National Institute of Economic and Social Research. The think tank warned Ms Reeves faced an 'impossible trilemma' of meeting her own fiscal rules while hitting spending commitments and upholding a manifesto pledge to not raise taxes. Poor growth, eye-watering debt levels and welfare cut U-turns have led to a 'worsening' outlook, analysis shows. Prof Stephen Millard, from the NIESR, said: 'We would advocate building a bigger buffer. To do that requires a moderate but sustained increases in taxes.' The think tank has upped its growth forecast for this year to 1.3 per cent but 2026 is down from 1.5 per cent to 1.2 per cent. It said the UK can expect inflation at a higher-than-expected 3.5 per cent due to bigger wages and the national insurance hikes. Meanwhile, research shows the living standards of the poorest 10 per cent of households fell by 1.3 per cent in 2023-24. They are 10 per cent lower than pre-Covid levels. Shadow Chancellor Mel Stride said: 'Labour will always reach for the tax rise lever because they don't understand the economy. 'Businesses are closing, unemployment is up, inflation has doubled and the economy is shrinking. And Labour are refusing to rule out more damaging tax rises on investment.'
Daily Mail
29 minutes ago
- Daily Mail
JEFF PRESTRIDGE: How to stop millions of pensioners getting taxed on their state pensions
Many pensioners feel victimised by Labour – and understandably so. Deprived last year of their universal right to winter fuel payment, they continue to be hit by a toxic mix of rising household bills and higher taxes on their income and savings. Yet they refuse to lie down without an almighty fight. Buoyed by the Government's partial U-turn on winter fuel payment, they have now set their sights on getting Chancellor Rachel Reeves to lift the freeze on the personal allowance, which has been stuck at £12,570 since 2021 – and is currently set to remain at this level until at least 2028.
