“Diageo raises cost-cutting target as US tariffs bite”
Financial Times reports:
“Diageo has forecast a larger than expected hit to profits from US tariffs this year but raised its cost-savings target, as the spirits group steps up efforts to strengthen its finances amid a global downturn in alcohol consumption.
“The maker of Guinness and Johnnie Walker said at its full-year results on Tuesday that it was expecting a $200mn hit to operating profits in the current year as a result of US President Donald Trump’s trade war, up from an expected $150mn hit previously. …
“The spirits group abruptly parted ways with chief executive Debra Crew last month, replacing her on an interim basis with chief financial officer Nik Jhangiani. Diageo said it expected to make a decision on a new permanent CEO by October. …
“Diageo has endured a turbulent few years. Its shares have fallen 30 per cent in 2025 amid fears over the impact of tariffs, widespread alcohol moderation and trading down to cheaper brands by squeezed consumers. … At its half-year results in February, Diageo scrapped its long-standing medium-term organic sales growth target of 5 per cent to 7 per cent, blaming uncertainty over US tariffs and weak demand.
Assessment
Alcohol industry giant Diageo is facing one of the most challenging periods in its recent history. Global alcohol use is declining, and more people are going alcohol-free – a shift that is eroding the foundations of the company’s business model.
In the past year, Diageo’s operating profit plunged nearly 30% and its share price has fallen by the same margin. The alcohol giant is now resorting to aggressive cost-cutting, considering asset sales, and undergoing leadership upheaval, all while being squeezed further by tariffs.
This is more than a temporary downturn; it reflects a structural shift. Research has shown how the alcohol-free norm, especially among younger generations, poses a systemic challenge to Big Alcohol’s future.
The industry’s shrinking demand base is leading to new forms of aggressive marketing and expansion into vulnerable markets.
Diageo’s struggles show that falling alcohol use is both a major public health gain and a direct challenge to corporate dominance. But the same pressures may drive more desperate tactics to protect profits as shareholders begin exerting pressure – from aggressive lobbying against effective policies to initiatives to pollute the public discourse, deceive about the harms of their products and targeting new groups of consumers in even more predatory ways.
Alcohol policy advocates need to be ready for when Diageo and other Big Alcohol giants in similar predicaments deploy these strategies and tactics in their countries.