Diageo Share Price Slides After Dividend Cut as New CEO Promises Fixes for Guinness Capacity
The latest results under new leadership have pushed diageo share price lower after the company halved its dividend and downgraded sales and profit expectations for a second time in four months, while pledging to tackle Guinness capacity constraints in London.
Dividend cut and downgraded forecasts
The company slashed its shareholder dividend, reducing it to 20 cents a share from 40. 5 cents a year earlier. It also cut its annual sales and profit forecast for the second time in four months, and now expects organic sales to fall between 2% and 3% in 2026, with organic operating profit forecast to remain flat.
Diageo Share Price: market reaction and movement
Diageo’s shares had been boosted when the new chief executive’s appointment was announced last November, but the stock slid by 12% on Wednesday afternoon, making it the biggest faller on the FTSE 100. The combination of a halved dividend and downgraded near-term guidance has been cited as a key driver of the downward move in diageo share price.
New CEO background and strategy
The first results under the new chief executive, Sir Dave Lewis, were presented after he took the reins in January following a four-month recruitment drive. Lewis, a former Tesco chief executive who carries the nickname "Drastic Dave" tied to cost-cutting during almost three decades at the conglomerate Unilever, described his initial weeks in the role as "pretty intense". He said cutting the dividend was not a simple choice but necessary as the North American market is challenged and the portfolio needs time and investment to become more competitive. He indicated the company will invest in capacity and capability and signalled moves consistent with price changes.
Demand pressures in key markets and product impacts
The results pointed to weak consumer demand in the US and China. Pressure on household finances and broader consumer shifts — including the rise in GLP-1 weight-loss injections such as Mounjaro and Wegovy and lifestyle changes that see younger people drinking little or no alcohol — were described as factors weighing on volumes. Consumption of spirits was said to remain fairly stable despite use of GLP-1 drugs, but consumers are increasingly choosing fewer drinks per occasion, with fewer serves per outing squeezing revenue. The company plans to respond by offering smaller packs.
Brand-level effects and Guinness capacity constraints
The company, owner of major brands including Smirnoff vodka, Johnnie Walker whisky and Don Julio tequila, noted particular pressure in the US tequila category where consumers are opting for cheaper options, affecting Don Julio and Casamigos. Guinness was praised as a "phenomenal asset" and described as the fastest-growing beer brand in North America, yet it is also facing operational challenges. The business warned of capacity constraints for Guinness in London pubs that are affecting drinkers of the "black stuff" and said the capacity and geographical constraint must be addressed quickly.
Leadership turnover and recent history
Lewis’s appointment followed the abrupt resignation last July of Debra Crew, whose tenure was marked by lacklustre performance and investor disquiet. The new chief executive’s arrival initially gave a share price boost, but the combination of tougher forecasts, the dividend cut and ongoing market pressures has since reversed that uplift.
Outlook and uncertainties
The company signalled a willingness to change pricing and pack strategies to respond to squeezed consumer finances and shifting drinking habits. Recent updates indicate the new leadership has taken decisive action on payout policy and signalled further pricing moves, but details and outcomes may evolve. One sentence in the results narrative is incomplete and unclear in the provided context: a passage that begins "However, soaring sales left the company at times unable to meet de" is truncated and unclear in the provided context.
Investors watching diageo share price will be focused on execution of capacity upgrades for Guinness, the effectiveness of smaller pack and pricing strategies, and whether stabilising demand in the US and China returns revenue to analysts' expectations.
