Diageo is set to nearly double Guinness production by 2031 as new chief executive Dave Lewis launches a sweeping turnaround plan that will also see a \u201csignificant\u201d reduction in the drinks giant\u2019s 30,000-strong global workforce.<\/p>\n
Lewis, who earned the nickname \u201cDrastic Dave\u201d during his time at Tesco for his aggressive cost-cutting approach, outlined the plans after Diageo reported a fall in sales but operating profit slightly ahead of expectations.<\/p>\n
Lewis declined to say how many jobs would go, but said he had identified \u201cmassive\u201d duplication across the business since taking the top job.<\/p>\n
\u201cNobody [inside the company] is saying to me that this is the wrong thing to do,\u201d he said, while acknowledging that the consequences of the cuts would be difficult for employees.<\/p>\n
At the same time, Lewis is betting heavily on one of Diageo\u2019s strongest-performing brands Guinness.<\/p>\n
The company plans to invest heavily in Guinness, with the aim of capitalising on its continuing global popularity, particularly in North America, while increasing supply to avoid shortages that have affected the brand in the UK in recent years.<\/p>\n
\u201cWe\u2019re going to double the capacity of Guinness during the course of this plan [by 2031],\u201d Lewis said, describing the brand\u2019s future as \u201cvery bright\u201d.<\/p>\n
Guinness production capacity is expected to rise from 8.2m hectolitres today to 15.7m hectolitres by 2031 \u2013 an increase equivalent to around 300 Olympic-sized swimming pools of stout every year.<\/p>\n
The move will be closely watched by UK convenience retailers, who have faced periods of Guinness shortages during peak trading occasions, including the Christmas period. Increased capacity could help Diageo better meet demand as the brand continues to attract consumers beyond its traditional markets.<\/p>\n
Lewis also signalled a shift away from Diageo\u2019s previous heavy emphasis on premiumisation.<\/p>\n
The strategy, which saw the company build a portfolio increasingly weighted towards premium spirits, has become more challenging as consumers under financial pressure have become less willing to trade up.<\/p>\n
Rather than disposing of brands or pursuing acquisitions, Lewis said Diageo would focus on managing a broader portfolio, including mid-market products and smaller pack sizes designed to appeal to more cost-conscious shoppers.<\/p>\n
For convenience retailers, the move could prove significant as shoppers continue to balance affordability with the desire for branded products.<\/p>\n