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Diageo’s new boss, Dave Lewis, has barely started in the role, and the maker of Guinness and Johnnie Walker is already reportedly considering selling off its Chinese assets to trim down its portfolio.
The world’s largest spirits maker, whose other brands include Smirnoff vodka, Captain Morgan rum and Don Julio tequila, is working with Goldman Sachs and UBS to review its operations in China, where sales have been falling, according to Bloomberg News.
Its assets in the country include a 63%-plus stake in Shanghai-listed Sichuan Swellfun, which distributes the distilled spirit Baiju. The banks have been sounding out initial interest from Chinese strategic buyers and private equity.
Shares in Sichuan Swellfun have dropped 14% in the past year, giving the Chengdu-based company a market value of 19.2bn yuan (£2bn).
Lewis, a former Tesco chief executive who took the reins at Diageo on 1 January, was known as “Drastic Dave” during his nearly three decades at the Marmite to Dove soap conglomerate Unilever for his cost-cutting.
He then revived Tesco, Britain’s biggest supermarket chain, after a damaging accounting scandal, slimmed down its international arm, closed unprofitable divisions such as electricals and slashed thousands of jobs.
London-based Diageo is struggling with the impact of Donald Trump’s tariffs, high debt levels and consumer shifts, as many younger people choose to drink little or no alcohol. In November, it flagged a double-digit sales decline in China.
Diageo is streamlining its portfolio after announcing the sale of its 65% stake in East African Breweries for $2.3bn (£1.7bn) last month, offloading its last direct African beer operation.
Lewis took over from Debra Crew, a former captain in US military intelligence, who was appointed as chief executive in 2023 after the untimely death of the highly regarded Ivan Menezes.
Her tenure was marked by a shock profits warning later that year caused by supply issues in Latin America, as cash-strapped customers in Latin America and the Caribbean were consuming less alcohol and seeking cheaper brands.
There were further supply problems in the run-up to Christmas last year – this time a shortage of Guinness, when UK pubs complained that their flow of the “black stuff” had been rationed.
Diageo declined to comment.
