Diageo CEO Ousted as Drinks Giant Battles Slumping Sales
A leading global beverage company, Diageo, has seen a swift change in leadership, with Chief Executive Debra Crew departing with immediate effect. The move comes amid mounting pressure from investors following a period of declining alcohol sales and a subsequent drop in the company’s share price.
The board of Diageo, the parent company of iconic brands like Johnnie Walker and Guinness, confirmed on Wednesday that a search for a new permanent CEO is underway. In the interim, Diageo’s Chief Financial Officer, Nik Jhangiani, will assume leadership responsibilities. Jhangiani has reportedly gained favor with key investors since joining the company last September. The announcement spurred a positive market reaction, with shares rising as much as 4.3 percent, valuing the FTSE 100 company at approximately £44 billion.
Turbulent Tenure for Departing CEO
Crew’s time at the helm, beginning in June 2023, was marked by significant challenges. Just five months into the role, she was compelled to issue a profit warning due to an unanticipated downturn in sales within Latin America. This initial setback foreshadowed a broader struggle to maintain growth as the surge in spirits sales experienced during the pandemic subsided and consumer spending slowed.
Since Crew took over, Diageo’s shares have fallen by 43 percent, reflecting investor concerns about the company’s performance. In February, the company appointed Sir John Manzoni, formerly of the UK’s cabinet office, as chair, coinciding with the abandonment of a medium-term sales growth target of 5 to 7 percent. The decision was attributed to uncertainties surrounding US tariffs and weakening demand.
Investor Concerns and Cost-Cutting Measures
Crew reportedly struggled to persuade investors that the recent sales slowdown was merely a temporary cyclical dip, rather than a sign of deeper, more systemic issues within the business or a fundamental shift in alcohol consumption patterns.
In May, Jhangiani unveiled plans to reduce Diageo’s cost base by $500 million and indicated the potential for significant asset disposals. According to a company release, Diageo’s financial guidance remains unchanged at this time.
A Departure by Mutual Agreement
Sir John Manzoni expressed gratitude for Crew’s contributions, specifically acknowledging her leadership “through the challenging aftermath of the global pandemic and the ensuing geopolitical and macroeconomic volatility.” The company characterized the departure as a result of “mutual agreement.”
Crew’s appointment to the top position was accelerated by the unexpected passing of her predecessor, Sir Ivan Menezes, a month prior. Prior to leading Diageo, Crew served in the US military and held executive positions in the consumer goods sector, including a tenure as CEO of Reynolds American.
The incoming interim CEO, Nik Jhangiani, now faces the critical task of revitalizing the embattled drinks group and restoring investor confidence.
