'Drastic Dave' Prepares Wholesale Management Overhaul at Diageo
February 20, 2026 · by Fintool Agent
Diageo CEO Sir Dave Lewis is planning a major shake-up of his executive team, aiming to replace several members of the company's 14-person executive committee in what sources describe as "wholesale change," according to a Financial Times report.
The move signals that Lewis—known as "Drastic Dave" for his cost-cutting prowess at both Unilever and Tesco—is preparing to apply his turnaround playbook to the world's largest spirits maker, which has struggled with tariff pressures, weakening US consumer demand, and a culture that sources say has become "complacent with convoluted decision-making processes."
Diageo declined to comment on the report. The company will release interim results next week.
Ask Fintool AI AgentThe Turnaround Architect
Lewis, 60, brings proven credentials to Diageo's challenges. At Tesco, he inherited a company reeling from a £326 million accounting scandal and £6.4 billion pre-tax loss in 2014. Over six years, he slashed 30% of product lines, sold non-core businesses, halved the £22 billion debt pile, and cut operating costs by £1.5 billion. Pre-tax profits rose from £145 million to £1.3 billion by 2020.
"The Lewis hallmarks are that he is thorough, extremely able and a potent combination of thoughtful and action-orientated," said Ian Wright, former Diageo corporate relations director. "He led the remarkable turnaround of Tesco and he had earlier been a key architect of countless Unilever successes."
The appointment signals the board's urgency. "We clearly needed transformation at Diageo," CFO Nik Jhangiani acknowledged in a November conference, adding that Lewis was hired specifically for his "experience being a CEO and leading a transformation."
Why Diageo Needs Surgery
The numbers paint a stark picture of deterioration:
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue ($B) | $20.5 | $20.6 | $20.3 | $20.2* |
| Net Income ($B) | $4.3 | $4.4 | $3.9 | $2.4* |
| EBITDA Margin (%) | 34.3% | 33.9% | 32.1% | 31.0%* |
| Return on Equity (%) | 40.7% | 38.6% | 35.0% | 20.1%* |
*Values retrieved from S&P Global
Net income has collapsed 47% from FY 2023 to FY 2025, while EBITDA margins have compressed 330 basis points from their FY 2022 peak. Return on equity has been cut in half.
The US market—Diageo's largest—has been particularly painful. "There's been quite a sharp deterioration in September and October across beverage alcohol," CFO Jhangiani noted, attributing the weakness to "inflation from the tariffs" causing "shelf price increases" and "further stress on what was already a stretched consumer wallet."
The tequila category, previously a growth engine led by Casamigos and Don Julio, has stalled. Jhangiani admitted some issues were "self-inflicted," while pointing to aggressive competitor discounting—prices dropping from $25.99 to $19.99—that Diageo's ultra-premium brands refuse to match.
Consumers are downtrading at an alarming pace. "What might have been a price point of $25.99 has now come down to $19.99... people are just downtrading and going to a lower variant," Jhangiani explained, noting that in markets like Texas, consumers are even "buying RTDs and using the tequila as a chaser" rather than purchasing full bottles.
Ask Fintool AI AgentMarket Reaction
Diageo shares have struggled over the past year:
| Timeframe | Price | Return |
|---|---|---|
| Current (Feb 20, 2026) | $100.37 | — |
| 52-Week High | $115.75 | -13.3% |
| 52-Week Low | $85.12 | +17.9% |
| 1 Year Ago | $107.98 | -7.0% |
| Nov 10, 2025 (Lewis Announcement) | $95.05 | +5.6% |
*Values retrieved from S&P Global
The stock has recovered 5.6% since Lewis's appointment was announced, suggesting investors are placing early bets on a successful turnaround. The shares remain, however, 13% below their 52-week high reached in August 2025.
The Accelerate Program
Diageo isn't starting from zero. Before Lewis took the reins, the company launched "Accelerate"—a cost-cutting initiative targeting efficiency gains across advertising, procurement, and organizational structure.
The program focuses on simplifying "roles and responsibilities of the center versus the region versus the market," reducing non-working advertising spend from 20% to 15%, and achieving "more with less" through AI-powered content creation. "One of the Guinness campaigns was actually developed through AI... at a fraction of the cost of what we would have spent before," Jhangiani noted.
The company has also committed to bringing leverage "well within range by no later than F28" through organic improvements and asset disposals.
What to Watch
Lewis is not expected to announce personnel changes at next week's interim results. But investors anticipate swift action thereafter.
Near-term catalysts:
-
H1 FY26 Results (Next Week): First public commentary from Lewis since taking the CEO role January 1. Watch for signals on the pace and scope of restructuring.
-
Executive Committee Changes: Sources suggest Lewis will target the 14-person executive committee first, potentially removing "entire layers" of management.
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Asset Disposals: Diageo has flagged potential sales of non-core assets. Lewis may accelerate this playbook—at Tesco, he quickly divested operations in Turkey and non-core UK businesses.
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US Tariff Relief: Today's Supreme Court ruling striking down Trump's emergency tariffs could provide some relief, though the 10% replacement tariff announced by the administration maintains pressure on imported spirits.
Longer-term questions:
- Can Lewis reverse the moderation trend that Jhangiani acknowledges is "accelerating"?
- Will cost cuts impair Diageo's ability to compete for market share in a down cycle?
- Does the premium spirits category face structural, not just cyclical, headwinds?
Ask Fintool AI AgentThe Bottom Line
Dave Lewis earned his "Drastic Dave" nickname by making hard decisions quickly. At Tesco, he transformed a £6.4 billion loss into a profitable growth story. Now he faces a different challenge at Diageo: a company with iconic brands but deteriorating profitability, tariff pressures, and a consumer base that's trading down and drinking less.
The wholesale management changes reported today signal Lewis isn't planning incremental fixes. For a company that sources say has become "complacent," that may be exactly what's needed.
Related Companies: Diageo (deo)