Finance
New Diageo CEO cuts forecasts, dividend as he strives for reset
Published by Global Banking & Finance Review®
Posted on February 25, 2026
2 min readLast updated: February 25, 2026
Quick Summary
Diageo cut its dividend and lowered 2026 organic sales guidance to a 2%–3% decline amid weak U.S. demand. New CEO Dave Lewis faces debt reduction and growth challenges amid tariffs and China softness.
By Emma Rumney and Shashwat Awasthi
Feb 25 (Reuters) - Diageo's new boss Dave Lewis cut the company's annual forecast and dividend in his first results presentation on Wednesday, sending its shares down 6% and underscoring the scale of his task to turn around the world's biggest spirits maker.
The Johnnie Walker whisky and Guinness beer maker's financial update also weighed on the share prices of its peers. Pernod Ricard, Remy Cointreau and Campari fell by around 3% by 0830 GMT.
Dave Lewis, who took over as CEO in January, needs to reduce debt and revive growth, while managing tariff-related uncertainty in the U.S., slowing demand in China, fragile global consumer sentiment, and evolving drinking preferences among some consumers.
"There are a number of things impacting our category. By far and away, the strongest is those pressurised consumer wallets," he said in an earnings presentation.
He said the rise of weight loss drugs, which research indicates can reduce the desire for alcohol, changing lifestyles and alternatives, such as legal cannabis, also had an impact, but that this was small for now.
Diageo now expects 2026 organic sales to fall 2%-3% and operating profit to be flat to up low-single-digits after volumes declined in four of its five regions in the first half, it said.
It had earlier forecast flat to slightly lower sales and low-to-mid-single-digit profit growth.
The company declared an interim dividend of 20 cents per share, down from 40.5 cents a year ago, and set a minimum floor for dividend of 50 cents per annum.
TOUGH START FOR 'DRASTIC DAVE'
Investors are focused on how Lewis, nicknamed "Drastic Dave" for his history of cost-cutting reforms at Tesco and Unilever, will implement his turnaround strategy and are keen for clarity on his plans.
Diageo cut some jobs in the first half, and Lewis said he plans to present an updated strategy to the board in the second quarter and share it publicly in the third.
The maker of Smirnoff Vodka and Captain Morgan rum has already launched a plan to sell assets and cut costs.
The company's U.S. sales declined 9.3% in the first half. Sales of tequilas such as Don Julio, which has been an important driver of growth, tipped more than 23% lower.
(Reporting by Shashwat Awasthi and Aatrayee Chatterjee in Bengaluru, Emma Rumney in London; Editing by Mrigank Dhaniwala and Barbara Lewis)
Key Takeaways
- •Diageo reduced its 2026 organic sales outlook to a 2%–3% decline.
- •The company cut its dividend alongside the guidance downgrade.
- •Persistent U.S. demand weakness continues to weigh on performance.
- •New CEO Dave Lewis, in place since January, aims to reduce debt and revive growth.
- •Tariff uncertainty, China slowdown and shifting drinking trends add pressure.
Frequently Asked Questions about New Diageo CEO cuts forecasts, dividend as he strives for reset
1What is the main topic?
Diageo cut its dividend and lowered its 2026 sales forecast due to weak U.S. demand, marking the second guidance downgrade in about four months.
2Why did Diageo reduce guidance and the dividend?
Management cited soft U.S. demand, tariff-related uncertainty, slower China sales and evolving drinking preferences, prompting tighter forecasts and a dividend cut.
3Who is leading Diageo and what are the priorities?
New CEO Dave Lewis, who took over in January, is focused on reducing debt, stabilizing demand in key markets and reigniting growth across the portfolio.
