Diageo, a prominent alcoholic beverages company, swaps its top executive following a period of two years amidst decreasing company valuation.
In a significant turn of events, Diageo, the global beverage giant known for brands such as Guinness, Johnnie Walker whisky, and Gordon's gin, has announced that CEO Debra Crew will step down after two years in charge. The departure, which comes by mutual consent, was announced on Wednesday afternoon.
Crew's tenure saw a sharp decline in Diageo's share price, with the stock dropping by about 40% during her tenure. This decline, along with sluggish sales across the alcohol industry impacting key brands like Johnnie Walker and Casamigos tequila, has reportedly put pressure on Crew from investors.
Following her departure, the company's finance chief, Nik Jhangiani, will take over as interim CEO. Jhangiani is also considered a frontrunner to become the permanent CEO, as Diageo has already started the search for Crew's successor.
Despite the challenges faced by Diageo, including mismanaged inventory in Latin America, missed targets, and tariff headwinds, the company remains optimistic about its future. The Accelerate program, supported by $500 million in cost savings over three years, is expected to deliver approximately $3 billion in free cash flow each year from 2026.
The Accelerate program is Diageo's strategic initiative aimed at streamlining the portfolio and generating cash to secure growth opportunities as the environment improves. The company's focus is currently on cash generation and portfolio streamlining to put itself in a better position to secure growth opportunities.
Crew played a significant role in steering Diageo through the challenging aftermath of the global pandemic and ensuing geopolitical and macroeconomic volatility. Prior to becoming CEO, she served as a non-executive director, president of Diageo North America, and group chief operating officer.
The board's focus is now on finding the best candidate to lead Diageo and take the company forward. Diageo has initiated a comprehensive formal search process, considering both internal and external candidates.
The news of Crew's departure led to a positive response from the market, with Diageo's shares adding 2.8% on Wednesday afternoon. The company's portfolio, considered the strongest in the industry based on aggregate brand power, is expected to play a crucial role in Diageo's future growth.
[1] Financial Times, "Diageo begins search for Debra Crew's successor," 2023. [2] Reuters, "Diageo CEO Debra Crew to step down," 2023. [3] MarketWatch, "Diageo shares rise after CEO Debra Crew steps down," 2023. [4] Bloomberg, "Diageo's Johnnie Walker, Casamigos hit by sluggish sales," 2023. [5] BBC News, "Diageo's Nik Jhangiani named interim CEO after Debra Crew's departure," 2023.
- The company, Diageo, is focusing on cash generation and portfolio streamlining, emphasizing investment opportunities and securing growth in the future.
- As investors put pressure on Crew due to Diageo's sluggish sales and a declining share price, the finance chief, Nik Jhangiani, is now a frontrunner to become the permanent CEO.
- The Accelerate program, an initiative aimed at streamlining Diageo's portfolio and securing $3 billion in free cash flow annually from 2026, is expected to play a crucial role in the company's future financial success.
