Diageo unveiled a sweeping three-year restructuring plan Thursday aimed at cutting approximately $1 billion in costs as the global drinks giant looks to improve profitability and reignite growth, particularly in North America. According to Scotland's The Press & Journal, the plan could eliminate dozens of jobs at several Scotch whisky distilleries.
The maker of prominent brands like Johnnie Walker, Guinness and Smirnoff said the savings will come from a redesigned operating framework and supply chain improvements designed to create a "more agile, competitive and cost-effective" business.
According to The Press & Journal, 172 workers across Diageo's Highlands and Islands operations have been placed at risk of redundancy, with up to 38 positions expected to be cut. The outlet reported that Cardhu, Cragganmore and Dufftown distilleries are among the affected sites.
According to the company, roughly $850 million of the savings will come from changes to its operating model, with another $150 million expected from supply chain initiatives. The restructuring is expected to cost about $1.2 billion to implement.
"This new strategy, executing with a new, more agile, competitive and cost-effective operating model, gives us confidence that we can return Diageo to a business consistently creating value for shareholders," CEO Sir Dave Lewis said in a statement.
Diageo said it expects broadly flat organic net sales growth for fiscal 2027, with North America remaining its biggest challenge. The company forecasts mid-single-digit declines in North America organic net sales while expecting overall organic operating profit to grow by the low- to mid-single digits as cost savings begin to take effect.
The company also reaffirmed its long-term confidence in premium spirits and ready-to-drink cocktails while highlighting Guinness as a major growth opportunity that will receive additional investment.
Over the medium term, Diageo expects low-single-digit annual organic net sales growth between fiscal 2027 and 2029, with mid-single-digit operating profit growth and approximately $8 billion in cumulative free cash flow over the three-year period.
The restructuring comes as Diageo faces slowing demand across parts of the beverage alcohol industry, particularly in North America, where consumer spending has softened.
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