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Diageo plans to double Guinness capacity through turnaround
Diageo expects to incur $514 million in charges tied to employee severance as part of a restructuring costing $1.2 billion.
Diageo said its new CEO Dave Lewis is rolling out a turnaround plan that includes doubling Guinness production capacity by 2029 and cutting a significant portion of its workforce. The British drinks company outlined the changes after reporting a decline in sales alongside slightly better-than-expected operating profit, and shares bounced following the update, according to the Guardian Business.
Lewis said the restructuring will involve job cuts but declined to provide a specific worldwide headcount reduction. The company told investors it expects to record $514 million in charges related to employee severance, and Lewis said he found “massive” duplication in roles after taking over as CEO.
Diageo also plans to pursue annual savings of $1 billion over two years through a restructuring program that is expected to cost $1.2 billion. As part of the plan, it will invest $1 billion in the Guinness brand to increase global sales, with a focus on North America, and to help avoid repeat shortages that have been reported in the UK, including during the festive period.
Lewis said the company aims to double Guinness capacity during the plan timeframe and described the brand’s outlook as “very bright.” The Guardian Business also noted that after speculation surfaced about Diageo potentially selling Guinness, the company moved quickly to quash any suggestion of a sale of its best-known asset.