Diageo Share Price plunges after new CEO halves dividend and flags Guinness capacity problems
The diageo share price fell sharply after the drinks group’s new chief executive, Sir Dave Lewis, halved the dividend and cut sales and profit forecasts for a second time in four months, citing weak demand in the US and China and capacity constraints for Guinness in London.
Diageo Share Price tumbles after dividend cut
Shares slid nearly 13% on Wednesday, making Diageo the biggest faller on the FTSE 100 and wiping out more than £5bn of market value, after Lewis announced a halving of the shareholder dividend to 20 cents a share from 40. 5 cents a year ago. Lewis, who took the reins at Diageo in January, described his first seven weeks in the role as "pretty intense" and moved quickly to slash the payout.
New CEO’s background and leadership changes
Sir Dave Lewis, the former Tesco chief executive who earned the nickname "Drastic Dave" for cost-cutting during almost three decades at Unilever, was appointed after a four-month recruitment drive and had briefly boosted the stock when his appointment was announced last November. His arrival follows the abrupt resignation of Debra Crew last July, under whose tenure the company faced lacklustre performance and investor disquiet.
Forecast cuts: sales down, profit flat for 2026
Diageo cut its annual sales and profit forecast for the second time in four months, saying it now expects organic sales to fall between 2% and 3% in 2026 while forecasting organic operating profit to remain flat. Weak demand in the US and China was cited as a key driver of the downgraded outlook.
Guinness capacity constraints and consumer trends
Lewis warned of capacity constraints that are affecting drinkers of "the black stuff" in London pubs, saying, "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. " He praised Guinness as a "phenomenal asset" and said it is the fastest-growing beer brand in North America, even as it faces distribution and capacity challenges in London.
Shifts in drinking habits, GLP-1 impact and product responses
Lewis said consumption of Diageo’s spirits has remained fairly stable despite the rise in GLP-1 weight-loss drugs such as Mounjaro and Wegovy, but that consumers are choosing to have fewer drinks per occasion. "It’s the serves per occasion where we see the change, " he said, adding, "What you see is a very significant squeeze on disposable income. " He said the company will respond by offering smaller packs; he also named pressure in the US as a factor in weaker tequila sales, with US drinkers buying less Don Julio and Casamigos and opting for cheaper options.
Brands under the Group and cultural lift for Guinness
The world’s largest spirits maker owns brands including Smirnoff vodka, Johnnie Walker whisky and Don Julio tequila. Guinness has enjoyed a social-media-driven surge in popularity after being adopted by younger drinkers and female celebrities such as Kim Kardashian and Olivia Rodrigo, shifting perceptions from its old-fashioned image even as logistical constraints bite.
Lewis said the company needs to invest in its business "specifically in its capacity and capability" and signalled price and packaging moves to address squeezed consumer finances and geographic constraints. The board and management have flagged investment to tackle capacity issues and to make the portfolio more competitive as they implement the new chief executive’s turnaround plan.
Market reaction and the updated outlook underline immediate priorities for the company: restore investor confidence after the share slide and fix Guinness capacity bottlenecks while navigating weaker demand in the US and China and a changing consumer landscape.
