Diageo Share Price Plummets After CEO Halves Dividend and Vows to Fix Guinness Shortage
The Diageo Share Price slid sharply after the company slashed its dividend and cut its annual sales and profit forecast for a second time in four months. The maker of Guinness and major spirits brands reported weak demand in the US and China, lost more than £5bn of market value on Wednesday and saw its shares drop nearly 13%, making it the biggest faller on the FTSE 100.
Diageo Share Price: market reaction and dividend cut
The company halved its shareholder dividend to 20 cents a share, down from 40. 5 cents a year ago. The move coincided with a sharp market sell-off that erased over £5bn of value and drove the nearly 13% fall in the stock. Investors reacted to the combination of a reduced payout and a downgraded outlook for sales and profit.
Dividend halved and the new CEO's early actions
These results were the first released under the new chief executive, Sir Dave Lewis. Lewis, a former Tesco chief executive who picked up the nickname "Drastic Dave" after cost-cutting during almost three decades at Unilever, took the reins in January. He described his first seven weeks in the role as "pretty intense" and framed the dividend reduction as a difficult but necessary step to repair competitiveness and invest in capacity and capability.
Sales and profit outlook cut again
The company trimmed 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, while forecasting organic operating profit to remain flat. Management flagged weak demand in the US and China as key drivers of the downgrade, and noted that earlier optimism around the CEO's appointment had been reversed by the trading update.
Leadership change and investor reaction
Lewis’s appointment followed a four-month recruitment drive and came after the abrupt resignation last July of Debra Crew, whose tenure had been marked by lacklustre performance and investor disquiet. The company’s shares had been boosted after Lewis’s appointment was announced last November, but the latest results triggered the large drop that sent the stock to the bottom of the FTSE 100 on Wednesday.
Guinness capacity constraints and "the black stuff" shortage in London
Management warned of capacity constraints affecting drinkers of "the black stuff" in London pubs, saying there are capacity and geographical constraints that need to be addressed quickly. Despite being praised as a "phenomenal asset" and described as the fastest-growing beer brand in North America, Guinness continues to face distribution and availability challenges in the UK capital that the company vows to tackle.
Consumer trends, GLP-1 drugs and packaging response
Diageo cited a squeeze on disposable income and changing consumer habits, including the rise in use of GLP-1 weight-loss treatments such as Mounjaro and Wegovy and a broader lifestyle shift in which many younger people choose to drink little or no alcohol. Management said overall spirits consumption remained fairly stable despite the GLP-1 trend, but consumers are choosing fewer serves per occasion. To respond to tighter household finances, the company plans to offer smaller pack formats.
Brand-level impacts: tequila, social media and celebrity influence
Pressure on consumer spending has driven US drinkers toward cheaper tequila alternatives, reducing demand for premium labels including Don Julio and Casamigos. At the same time, Guinness—once seen as an "old man's drink"—has soared in popularity on social media and been adopted by younger drinkers and female celebrities, including Kim Kardashian and unclear in the provided context.
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These developments leave the company confronting simultaneous operational and demand-side problems: capacity constraints for a key beer brand in London, reduced demand in major markets, and a leadership-led programme of cost and structural changes that began with a marked cut to the dividend. Management’s pledge to invest in capacity and capability, and to adapt pack formats, sets a roadmap for action, but the Diageo Share Price will likely remain sensitive to execution on those fixes and to whether consumer demand stabilises.
