A former Tesco boss has been appointed to the top job at Guinness owner Diageo, as the world’s biggest drinks firm looks to turn around its sagging sales.
Sir Dave Lewis will take over the brewing giant on January 1, after former chief executive Debra Crew resigned in the summer after two years in the role.
The company has been struggling with weaker sales across its range despite growth in Guinness sales, with shares recently falling to their lowest level in 10 years.
Following the announcement of Sir Dave’s appointment on Monday, Diageo’s share price rose 7% in early trading.
Diageo owns well-known brands such as Johnnie Walker whiskey, Smirnoff vodka and Captain Morgan rum, but has seen sales decline in key markets, particularly the United States and China.
Sir Dave was chief executive of Tesco for six years until 2020, and before that had spent almost 30 years at consumer goods giant Unilever. He will leave his current role as president of healthcare company Haleon.
Diageo said its board felt Sir Dave had extensive experience as a chief executive and proven leadership skills “which is suitable for Diageo at this time”.
“The market faces some headwinds, but there are also significant opportunities,” Sir Dave said.
“I look forward to working with the team to address these challenges and capture some of the opportunities in a way that creates value for shareholders.”
Diageo saw its operating profits decline to £3.2bn in the year to June, down around 28% compared to the same period a year earlier. He said there was “clearly a lot more to do” in what he called a challenging year, citing “pressure on consumers.”
Rising inflation has led people to adjust their spending in recent times, and consumers have stopped drinking and eating out.
The company has also been fighting against the change in drinking habits of younger people, who choose to drink less alcohol than previous generations.
“Dave Lewis needs to get Diageo back on track quickly,” said Dan Coatsworth, head of markets at AJ Bell.
“His style is to listen carefully to customers and suppliers and figure out what went wrong. The focus will be on repair jobs, not long-term growth.”
Coatsworth said the new boss earned the nickname “Drastic Dave” while at Unilever “because of his ability to make bold decisions without simply tinkering.”
“At Tesco, he retired after saying his job to stabilize the business was done, rather than staying on to take the business to the next level. It could be suggested that the same approach will be applied to Diageo.”
Sir Dave will replace Nik Jhangiani, Diageo’s previous chief financial officer, who has been acting as interim chief executive since Crew resigned in July.
Jhangiani will once again be CFO.
