Diageo Share Price slides 6% after dividend halved as new CEO warns of Guinness capacity crunch

The diageo share price slid 6% during early trading on Wednesday after the world’s largest spirits maker halved its dividend and cut its annual sales and profit forecast for the second time in four months — moves the company says are needed to tackle weak demand and invest in capacity.

Diageo Share Price reaction and the dividend cut

Shares moved lower on Wednesday after the company cut its shareholder dividend from 40. 5 cents a share to 20 cents. The cut came in the first results published under new chief executive Sir Dave Lewis and followed the announcement of downgraded sales and profit guidance for the year.

New CEO's early moves and the timeline

Sir Dave Lewis, who took the reins in January, described his first seven weeks in the role as "pretty intense" in a results webcast. His appointment followed a four-month recruitment drive and had earlier boosted the stock when it was announced last November; the diageo share price had been lifted then but fell back by 6% on Wednesday. Lewis succeeds leadership after the abrupt resignation last July of Debra Crew, whose tenure was marked by lacklustre performance and investor disquiet.

Forecasts trimmed again as U. S. and China demand softens

it had cut its annual sales and profit forecast for the second time in four months, citing weak demand in the US and China. It now expects organic sales to fall between 2% and 3% in 2026 and has forecast that organic operating profit will remain flat for the year.

Guinness capacity constraints in London pubs

Lewis praised Guinness as a "phenomenal asset" and said it is the fastest-growing beer brand in North America, but added it continued to face challenges. He warned that drinkers in London pubs were already seeing shortages: "If you’ve tried to buy a pint in London you also know that we have some capacity constraints, too. This capacity and geographical constraint is an issue that we need to address, and quickly. " it will invest in capacity and capability to tackle those limits.

Consumer shifts, GLP-1 drugs and company responses

The company linked part of the soft demand to broader consumer changes, noting squeezed household finances and the growing use of GLP-1 weight-loss drugs. Lewis named Mounjaro and Wegovy as examples and said consumption of Diageo’s spirits had stayed "fairly stable" despite the drugs, while adding that "it’s the serves per occasion where we see the change. " He warned of "a very significant squeeze on disposable income" and said the company plans to respond by offering smaller packs.

Brands and next steps

The group reiterated its position as the world’s largest spirits maker and highlighted its portfolio, which includes Smirnoff vodka, Johnnie Walker whisky and Don Julio tequila, as central to the turnaround plans. Lewis — nicknamed "Drastic Dave" for his cost-cutting record during almost three decades at Unilever and best known as a former Tesco chief executive — said the dividend decision was not taken lightly: "This is not an easy decision to make, but we believe it is the right one. "

Looking ahead, the company has said it will invest in capacity and capability and will adjust pack sizes to respond to consumer pressure on spending, while managing forecasts that now point to a 2%–3% fall in organic sales in 2026 and a flat organic operating profit for the year.