Diageo names former Tesco CEO Dave Lewis as new leader amid sales slump

Diageo names former Tesco CEO Dave Lewis as new leader amid sales slump

Diageo, the world's largest spirits producer, has appointed Sir Dave Lewis as its new chief executive starting 1 January, replacing interim leader Nik Jhangiani after Debra Crew's departure in July. The move follows a sharp decline in sales across key markets, despite growth in Guinness, and comes as the company's shares hit a 10-year low earlier this year.

Market reaction and leadership shift

Shares in Diageo surged 7% in early trading Monday after the announcement, signaling investor confidence in Lewis's track record. The former Tesco CEO, who led the supermarket chain from 2014 to 2020, steps in after nearly three decades at Unilever, where he earned a reputation for decisive leadership-nicknamed "Drastic Dave" for his bold restructuring moves. He will leave his current role as chairman of healthcare firm Haleon to take the helm.

Diageo's board cited Lewis's "extensive chief executive experience and proven leadership skills" as critical for navigating the company's current challenges. In a statement, Lewis acknowledged "headwinds" in the market but emphasized "significant opportunities," pledging to work with the team to "create shareholder value."

Financial struggles and consumer pressures

The appointment follows a dismal financial year for Diageo, with operating profits plummeting 28% to £3.2 billion for the 12 months ending June. Net sales dipped 0.1%, reflecting what the company called a "challenging year" marked by "pressure on consumers." Last week, Diageo forecast flat to slightly declining net sales for the coming year, blaming a "weaker US consumer environment" and sluggish demand in China.

Analysts attribute the downturn to broader economic strains, including inflation-driven cutbacks on discretionary spending like dining out and alcohol. Younger consumers, in particular, are drinking less than previous generations, reshaping industry trends.

Industry expectations and Lewis's approach

Dan Coatsworth, head of markets at AJ Bell, noted Lewis's reputation for rapid turnarounds, predicting a focus on "repair work" over long-term growth. "He listens closely to customers and suppliers to diagnose problems," Coatsworth said, adding that Lewis's tenure at Tesco-where he stabilized the business before stepping down-suggests a similar strategy at Diageo: "fixing what's broken first."

"Dave Lewis needs to put Diageo back on track quickly. His style is to listen closely to customers and suppliers and work out what's gone wrong. The focus will be on repair work, not long-term growth."

Dan Coatsworth, Head of Markets, AJ Bell

Brand portfolio and global challenges

Diageo's struggles contrast with its iconic portfolio, which includes Johnnie Walker whisky, Smirnoff vodka, and Captain Morgan rum. Yet even flagship brands like Guinness-one of the few bright spots-have not offset broader declines. The company's performance in the US and China, two of its largest markets, remains a critical concern as Lewis prepares to take over.