- FTSE 100 drinks giant sees profits slump by more than a quarter to £3.2bn
- Nik Jhangiani to increase its cost savings target from £376m to £470m
The new boss of Diageo has pledged to get the firm ‘firing on all cylinders’ amid a slump in demand for its drinks.
Interim chief executive Nik Jhangiani on Tuesday admitted the Guinness maker would make some job cuts as it ramps up cost savings by £94million.
But he insisted the FTSE 100 giant could eventually cash in on a trend for drinking in ‘moderation’ as profits slid 27.8 per cent to £3.24billion, tumbling further than analysts had predicted.
Sales fell 0.1 per cent to £15.20billion in the year to 30 June as Jhangiani said ‘the consumer wallet is under pressure’.
But the group singled out a ‘standout performance’ from Don Julio tequila, and Crown Royal Blackberry whisky, as well as its best-known Guinness.
Jhangiani, who took on the job last month after the sudden exit of its former chief executive Debra Crew, admitted that ‘there is clearly much more to do’.
Nik Jhangiani who took on the job last month after the sudden exit of its former chief executive
He announced the business would increase its cost savings target to £470million over the next three years, up from £376million.
This would include ‘some’ job cuts, he admitted, but said the programme was ‘not really about job cuts or elimination of roles’.
‘This could ultimately actually be about more numbers in terms of head count, as we look at more feet on the street, for example, including here in our home market,’ he added.
Diageo has been hit by a cocktail of challenges including US tariffs and weak demand in key markets like the US and China.
But its boss insisted there were opportunities to revive sales by ‘sharpening our strategy to get the whole portfolio firing on all cylinders’.
He said: ‘We’re monitoring changes in consumer behaviour, including moderation, which we see as potential opportunity, not simply a headwind.
‘Consumers who are moderating are not socialising any less across a broad range of occasions.’
As more drinkers opt for a so-called sober curious lifestyle, the group will explore how to improve its offer in lower ABV (alcoholic strength) and ‘ready to drink’ products.
He also said there were opportunities to appeal to consumers who were focused on ‘portion control, calorie control’.
These remarks follow bakery chain Greggs saying it is trying to entice customers who are on so-called ‘fat jabs’, despite their reduced appetites.
Jhangiani said this could also include some acquisitions but that the group was pushing ahead with plans to shrink its portfolio by ditching some ‘non-core’ brands.
He added: ‘We are focused on what we can manage and control and executing at pace.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .