Diageo is expecting to save approximately US$1bn over the next three years from a “significant” operating framework and supply-chain restructure.
Speaking this morning in the Guinness brand owner’s preliminary results call, CEO Dave Lewis said US$850m of the total savings will come from operating framework changes, while the remaining $150m will come from the supply chain.
“These savings are significant,” Lewis said. “They’re very important as we chart the turnaround of Diageo. The savings will allow us to invest in innovation, selectively, where we need to improve our competitiveness, but they also allow us to do so without needing to reduce the operating profit.”
Meanwhile, the new CEO laid out plans to spend $1.2bn on restructuring the business; $1.1bn of this will be put into a new operating framework and $100m will be invested in “optimising” the company’s supply chain.
Later today, The Johnnie Walker & Don Julio brand owner is set to unveil further details of Lewis’s plans for the business.
The ‘capital markets day’ announcements follow continued speculation around employee number reductions following Lewis’s appointment in January. Signalling potential staffing changes, Lewis added: “A restructuring programme of this size obviously has very significant impacts on Diageo colleagues, and I’d like to put on the record my deep appreciation for the way that Diageo colleagues have engaged with this change programme, most of which has been communicated throughout the business a month or so ago.”
Earlier this week, a Scottish trade union has claimed Diageo had placed 172 scotch distillery staff at risk of redundancy, with 38 jobs set to be cut as part of the company’s global restructuring programme. GMB Scotland said a four-week consultation process ended last week with no agreement reached. The union accused the spirits giant “of rejecting alternatives to compulsory redundancies and ignoring the risk to rural communities across the Highland and Islands”.
