UK-based beverage giant Diageo has announced a strategic shift, including a plan to cut $500 million in costs and make “substantial asset disposals” by 2028.

This move, aimed at streamlining operations and addressing challenging market conditions, has intensified industry speculation about the future of its global portfolio, including its controlling stake in East African Breweries Limited (EABL).

Aggressive Asset Divestment Plans

Diageo’s Chief Financial Officer, Nik Jhangiani, stated on May 19, 2025, that the company had identified opportunities for “substantial changes versus portfolio trimming.”

He added, “It’s clearly going to be above and beyond the usual smaller brand disposals you’ve seen over the last three years.”

This indicates a more aggressive approach to divesting non-core assets to reduce debt and improve financial flexibility. Previously, Diageo has offloaded brands like Cacique and Pampero Rums and Safari liqueur.

EABL’s Role in Diageo’s Portfolio

Despite this global review, EABL remains a regional player with operations across Kenya, Uganda, and Tanzania, and its products are distributed in over ten African countries.

Diageo, through its subsidiary Diageo Kenya Limited, significantly increased its shareholding in EABL to 65% in 2023 by acquiring an additional 15% stake for approximately KSh 22.8 billion.

This transaction was hailed as Kenya’s largest foreign direct investment that year and received approval from the Capital Markets Authority (CMA).

East African Breweries Plc (EABL) has paid an interest payment of Ksh 673.8 million to bondholders of its Ksh 11 billion medium-term corporate bond.
EABL Group MD and CEO Jane Karuku (middle) in the company of author and business management consultant Sunny Bindra (left) and Absa Bank Kenya Head of Global Clients and Financial Institutions Group Eric Riitho speaking on EABL’s success in celebrating 100 years of business.

The 2023 acquisition, however, prompted scrutiny from the Kenyan Senate, with concerns raised about potential downsizing, asset sales, and the possibility of a hostile takeover by other global brewers. EABL’s Managing Director, Jane Karuku, strongly refuted these allegations, labelling them “false and malicious.”

Karuku emphasised that EABL has not engaged in downsizing over the past decade, even during the COVID-19 pandemic, nor has it sold any strategic or critical assets. She highlighted EABL’s robust growth, noting an increase in total asset value from KSh 14 billion in 2000 to KSh 110 billion in 2022.

EABL’s leadership maintains that Diageo’s increased investment signals strong confidence in the Kenyan market and aligns with the company’s ambition to be among Africa’s most trusted and respected consumer brands.

Financial Goals and the “Accelerate” Program

While Diageo’s cost-cutting measures and asset disposal plans are set to deliver approximately $3 billion in free cash flow annually from fiscal 2026, CEO Debra Crew assured reporters that “nothing has changed” regarding well-performing brands like Guinness, which Diageo ruled out selling earlier this year.

The planned $500 million in cost savings will stem from changes to Diageo’s trade investment, advertising spend, overheads, and supply chain.

Further details on the “Accelerate” program, which aims for a “more agile global operating model,” are expected in August with the company’s full-year financial results.

While the plan does not include large-scale redundancies, some headcount adjustments may occur through slower hiring.

Third-Quarter Performance and Market Challenges

Diageo’s third-quarter trading update, released on May 19, 2025, showed a 2.9% increase in reported net sales to £4.38 billion, with organic sales up 5.9%. This growth was partly attributed to a “phasing” of sales, especially in North America, ahead of anticipated tariff changes.

In Europe, despite strong momentum from Guinness, net sales dipped 1.3% organically, reflecting “consumer pressure and just uncertainty surrounding all the geopolitical conflict,” according to CEO Debra Crew. She noted a “downtrading in spirits” in the region.

Net sales for Q3 and 9 months ended 31 March 2025

  Q3 ended 31 March 2025   9 months to 31 March 2025
Net sales Reported F25 Reported F24 Reported growth Organic growth   Reported F25 Reported F24 Reported growth Organic growth
  $m $m YoY % YoY %   $m $m YoY % YoY %
 
North America 1,903 1,796 5.9 6.2 5,998 5,880 2.0 2.0
Europe 898 910 (1.3) (0.4) 3,530 3,475 1.6 0.4
Asia Pacific 803 805 (0.2) 1.6 2,913 3,011 (3.3) (1.4)
LAC 378 335 12.8 28.5 1,428 1,404 1.7 10.6
Africa 369 385 (4.1) 10.1 1,313 1,360 (3.5) 9.3
Corporate 25 22 n/a n/a 95 85 n/a n/a
Diageo Total 4,376 4,253 2.9 5.9   15,277 15,215 0.4 2.4

Q3 Regional performance

The company reiterated its full-year guidance, expecting sequential improvement in organic net sales growth for the second half of the fiscal year.

Diageo also revised its estimated annual impact from U.S. tariffs to $150 million, a reduction from earlier forecasts, as the threat of levies on Mexican tequila and Canadian whisky has receded.


 

David Indeje serves as the community engagement editor at Khusoko, a digital platform covering East African business news. He manages editorial content, engages audiences, and amplifies diverse voices while consulting on digital strategy for brands in agriculture, governance, technology, and health. Indeje explores AI’s impact on journalism and works as a communications officer at KICTANet.

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