LONDON, March 9, 2026, 22:48 GMT
- Diageo closed at 1,521 pence on Monday, slipping 0.29%. Shares dipped as low as 1,491.5 pence during the session.
- The company is now guiding for a 2% to 3% drop in organic sales for 2026, and has slashed its interim dividend to 20 cents per share.
- Chief executive Dave Lewis plans to roll out a more detailed strategy later this year.
Diageo plc ended Monday down 0.29% at 1,521 pence, not far from the lows seen after CEO Dave Lewis slashed the drinks giant’s 2026 sales outlook and took an axe to its interim dividend on Feb. 25. Shares dropped as low as 1,491.5 pence during the session before recovering some ground.
This is hitting home for Diageo, with brands like Johnnie Walker, Smirnoff, Don Julio, and Guinness in the mix. Shares of Pernod Ricard, Remy Cointreau, and Campari dropped after Diageo’s Feb. 25 update, reflecting deeper worries around premium spirits, as both the U.S. and China remain sluggish.
Lewis, who stepped in as CEO in January, is expected to bring a more comprehensive strategy to the board during the second quarter, with plans to lay it out publicly in the third. In the meantime, the company has pulled back on cash returns to shareholders as it focuses on paying down debt, mending customer relationships, and expanding offerings to appeal to cost-conscious consumers.
On Feb. 25, Diageo projected a 2%-3% drop in 2026 organic sales, citing figures that exclude currency impacts and portfolio shifts. For the first half, both organic net sales and organic operating profit slipped 2.8%. U.S. spirits and Chinese baijiu lagged, offsetting gains seen in Europe, Latin America, and Africa.
The board slashed the interim dividend to 20 cents per share, while also resetting its payout ratio to 30%-50%—though not less than 50 cents annually. Net debt was $21.7 billion as of Dec. 31. Diageo pointed to its $2.3 billion agreed sale of the East African Breweries stake and Kenyan spirits unit to Asahi, saying the deal—when it finally closes in the second half of calendar 2026—should help bring debt down relative to earnings.
Lewis called out squeezed consumer wallets as “by far and away” the top concern. He’s pointed to targeted price reductions, a pivot toward more affordable spirits, and tackling Guinness supply limits. On top of that, Lewis didn’t mince words about customer service, admitting it had been “really very poor” in places. Reuters
Dan Coatsworth at AJ Bell didn’t mince words, labeling the half-year performance “awful results” and warning the “repair job is massive.” Over at Goodbody, Fintan Ryan suggested that Lewis’s initial steps amounted to just the “trailer” before a more comprehensive plan emerges. Reuters
Still, the reset carries plenty of risk. U.S. demand might not pick up, China’s sluggishness could linger, and lingering tariff worries might continue to squeeze margins, even as Lewis pushes higher investment in the business. Diageo also faces pressure to keep Guinness momentum going—avoiding supply hiccups and not relying too heavily on price hikes that could dent profits.
This patchwork is clear in peers’ numbers. Last month, Pernod Ricard flagged softer sales in each of its five key markets. Brown-Forman, on the other hand, topped quarterly forecasts just last week, steady whiskey and RTD orders doing the heavy lifting.
The immediate milestone: Lewis is set to deliver the much-anticipated strategy review later this year, first to the board, followed by a session with investors.
