Struggling Diageo to cut costs by more than a billion

Beverage producer Diageo, owner of Johnnie Walker, Smirnoff, and Baileys, plans to make significant cost cuts following a decline in revenue, while simultaneously investing in growth for brands such as Guinness and premixed cocktails.

Getting back on track with growth

Diageo saw its net revenue decline by 3% for the fiscal year ending June 30. Organic net revenue fell by 2% due to a 0.4% decline in volume and an unfavorable price and mix effect of 1.6%. The company performed particularly poorly in the U.S., partly due to import tariffs, as well as in China as a result of changes in government policy regarding spirits. Growth was seen, however, in Europe, Latin America and the Caribbean, and Africa. Operating income plummeted by 27% due to exceptional restructuring costs, and the company’s net income fell by 22.9%.