Diageo’s newly installed chief executive, Dave Lewis, has told senior leaders to pursue cuts in headcount and other expenses as he begins to reshape the global spirits group. Rather than issuing a fixed list of positions to eliminate, Lewis has set cost-reduction targets for members of the company’s executive committee, according to people familiar with the matter.
Lewis, who has previously been associated with aggressive cost-cutting at prior employers and has been given the nickname "Drastic Dave," has moved to impose financial discipline across the organisation as part of what the company describes as an operating-model redesign intended to improve competitiveness and deliver sustainable returns.
An internal communication outlining the scale of planned job losses is expected next week. The firm said in an emailed response to a news agency that it had already signalled in February its intention to redesign its operating model to strengthen competitiveness and deliver sustainable returns. Diageo also confirmed it will provide investors with an update on progress at a Capital Markets Day scheduled for August 6.
Addressing weak trading in North America, the company’s largest market, Lewis said last month that efforts to tackle the region’s underperformance had begun. He called North America the company’s "biggest challenge" and pointed to measures including price cuts for some tequila brands, such as Casamigos. Separately, he said Diageo had started "fundamental" work to address competitiveness across other markets worldwide.
Context and implications
- The approach Lewis is taking assigns financial targets to the executive committee rather than prescribing specific job eliminations, leaving the precise count of roles affected to be set by those executives.
- The company has framed these moves as part of a broader operating-model redesign first communicated in February and will report progress to investors on August 6.
- Actions to counter weak sales in North America, including targeted price reductions on select tequila labels, form part of the early steps in the turnaround effort.
What remains uncertain
- The exact number and distribution of job cuts have not been disclosed and will depend on the targets set for executive committee members and their implementation.
- The ultimate impact of the operating-model redesign on competitiveness and returns will be revealed only after the company provides its August 6 investor update.