Diageo reshuffle gathers pace under Sir Dave Lewis
Diageo is reportedly preparing a senior management shake-up as chief executive Sir Dave Lewis begins implementing plans to revive growth and strengthen competitiveness. The reported departures come as the drinks giant focuses on debt reduction, sharper pricing and expansion in ready-to-drink products.
Diageo has declined to comment on widespread reports that three senior executives are to leave in the first wave of new chief executive Sir Dave Lewis’s action plan to revive the company’s flagging fortunes.
The North America arm’s chief marketing and innovation officer, Ed Pilkington, is leaving after a 30 year career with the company that began with working on some of its brands even before the merger of Grand Metropolitan and Guinness created Diageo in 1997.
He has been head of marketing in North America for eight years.
North America remains a challenge
North America is Diageo’s largest market and the source of more than a third of its revenues.
In the first half of Diageo’s present financial year organic net sales in the region fell by 6.8% and one of Lewis’s first public comments has been that there “is much to do” there following a 9.4% drop in the third quarter.
Changes to Africa leadership
Also reported to be leaving as Lewis reshapes the business are chief human resources officer Louise Prashad and Hina Nagarajan, the president of the Africa division based in Nairobi.
She is leaving because Lewis is remerging the Africa operation with Europe and the Middle East. Nagarajan was previously the head of Diageo’s Indian arm, United Spirits.
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In a recent interview, she stressed that the business tripled between 2021 and 2024.
When she took over, United Spirits’ business was 60% in standard spirits and 40% in premium. “In four years, it became more than 60% premium with the lower end stabilising at 30% to 35%. Our market capitalisation tripled and crossed 1 trillion Indian rupees, which was a huge milestone, two and a half times where I started,” she told Whisky News.
Much of that growth came from whisky with the proportion of Scotch burgeoning as United Spirits sold off a portfolio of Indian made brands and focused on premiumisation.
Lewis preparing wider reforms
Lewis, who dislikes the soubriquet of “Drastic Dave” conferred on him when he revitalised Tesco, is expected to make further wide ranging changes to Diageo when he unveils his full plans in early August.
He has already cut the company’s dividend so that it can invest in its brands and has said that its focus must be on “customer, customer and customer.”
Focus on cash generation and RTDs
Already there is a swing towards cash generation to reduce debt, including the sales of the stake in East African Breweries and the Royal Challengers Bangalore cricket franchise, which together are bringing in more than $4 billion.
In addition, he is expected to trim margins to allow greater price competition and to “bet big” on RTDs to capitalise on Diageo’s global brand values.
Its presence in this burgeoning sector of beverage alcohol has slipped from 25% to around 10% in recent years as competitors have stolen a march in a market where consumers are seeking more convenience and wider choice.
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