Diageo, a major player in the FTSE100, is planning to swap out CEO Debra Crew due to declining sales.
In a significant move, Nik Jhangiani has been appointed as the interim CEO of Diageo, the FTSE 100 giant behind renowned brands such as Johnnie Walker and Guinness. Jhangiani's appointment follows the unexpected death of former CEO Ivan Menezes.
Jhangiani joined Diageo last September, having previously held key financial roles at Coca-Cola Europacific Partners and other prominent companies like Coca-Cola HBC, Bharti Enterprises, and Colgate-Palmolive. His extensive experience in finance and leadership across various industries is expected to bring a fresh perspective to Diageo.
Amidst a period of decline for Diageo, shares in the company rose nearly five percent in the week following Jhangiani's appointment as interim CEO. This uptick in share price comes amidst a broader market downturn, suggesting investors' renewed confidence in the company's future direction.
Jhangiani's tenure at Diageo has begun with a focus on cost-cutting. He recently unveiled a $500 million cost-saving plan, aimed at streamlining operations and improving efficiency. This move is seen as a strategic response to the post-pandemic boom in premium spirits giving way to weaker demand and global economic uncertainty.
Debra Crew, who replaced Menezes, has been one of the few women to lead a major UK-listed firm. However, her tenure at Diageo has been marked by operational missteps and external headwinds, with shares in the company falling 43% since she took over as CEO. Within five months of taking over, Crew was forced to issue a profit warning due to misread sales trends in Latin America, leading to a steep drop in earnings guidance.
Jeffries analysts have improved their investment case for Diageo due to Jhangiani's presence. There are concerns that an alcohol-shy generation is emerging, with increased usage of GLP-1 weight loss drugs like Ozempic potentially turning users off alcohol. However, Jhangiani's financial leadership and operational strategy expertise are seen as key to navigating these challenges.
Jhangiani has also signaled a willingness to explore asset disposals, which could help Diageo focus on its core business and improve its financial position. With Jhangiani at the helm, Diageo is looking to regain investor confidence and steer through the current economic uncertainties.
Sources: [1] Financial Times [2] The Telegraph [3] The Guardian
In his new role as interim CEO, Jhangiani's financial leadership and extensive experience in investing across various industries may contribute to a turnaround for Diageo's personal-finance and business situation. The uptick in Diageo's share price amidst a broader market downturn indicates that investors are showing renewed confidence in the company's future direction, which could potentially bode well for Diageo's investment opportunities.
