Diageo's Profit Slump Deepens as Trump Tariffs and CEO Exit Shake Investor Confidence
So, here's what's going on with Diageo right now — and it's quite a moment for the world’s largest spirits company. The drinks giant, which owns household names like Guinness, Johnnie Walker, Smirnoff, and Gordon’s gin, just reported a major drop in profits — nearly 28% down in operating profit compared to last year. That’s a pretty steep fall, and it’s sending ripples through the market.
This downturn comes during a particularly turbulent time for Diageo. The company is currently between leaders, following the departure of CEO Debra Crew, who stepped down “by mutual agreement.” She had only taken on the role in 2023, after the sudden passing of her predecessor, Ivan Menezes — a well-respected leader who had steered Diageo through a successful decade. Her short tenure was marked by profit warnings and operational missteps, especially around supply chain issues and a slump in sales in Latin America and the Caribbean.
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Taking the reins for now is interim CEO and current CFO, Nik Jhangiani. He’s trying to stabilize things and announced that the company is raising its cost-saving target from £500 million to £625 million. Interestingly, he stressed that this isn’t just about job cuts. In fact, while some positions may be eliminated, there’s still potential for headcount to grow in other areas. So, it sounds more like a strategic reshuffling than a broad slash in jobs.
But perhaps the biggest external blow to Diageo comes from across the Atlantic. The company confirmed it expects a $200 million annual hit due to new tariffs imposed by the U.S. under former President Trump’s policies. These tariffs include a 10% levy on UK-made spirits and a 15% one on EU products, while drinks from Mexico and Canada are exempt. That puts Diageo, with its deep UK and European roots, in a tough spot.
The company has been trying to soften the impact — looking at smarter inventory moves, tweaking supply chains, and reworking its investments. They believe they can absorb about half of the damage, but that still leaves a big hole in the books.
Meanwhile, the company’s share price has taken a hit — falling over 25% this year alone. It hasn’t been this low since 2016. That makes it one of the worst-performing stocks in the FTSE 100 right now. And part of that is tied to broader trends too — younger consumers are drinking differently, and the cost of living crisis has led many people to trade down to cheaper brands.
In all, it’s a rough patch for Diageo, no doubt. But with standout performances from products like Guinness and Don Julio, there's still strength in the brand portfolio. What’s clear is this: the next CEO will have their work cut out to steer Diageo back into growth — and to regain investor trust.
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