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I’ve suffered a right old beating at the hands of this FTSE share, but for the first time in ages I’m suddenly feeling a bit chipper about it. After years of pain, spirits giant Diageo (LSE: DGE) has finally served up a shot of unadulterated optimism.
The Diageo share price had been down more than 50% over three years and 26% in the last 12 months. It’s been a long fall from grace for what was once one of the safest FTSE 100 blue-chips of all. But it’s up 7.5% as I write Monday (10 November) lunchtime.
After the board cut full-year guidance last Thursday, I asked on these pages whether it was game-over for the Diageo share price. Organic net sales are now expected to be flat or slightly lower in 2026, with operating profit growth limited to low-to-mid-single digits.
Interim chief executive Nik Jhangiani tried to reassure the market with talk of cost discipline, efficiency plans, and early wins in Europe, but without a permanent CEO, investors were unconvinced. That’s now changed.
Diageo under new leadership
The kicker is today’s news that former Tesco chief executive Dave Lewis has been made permanent CEO from 1 January 2026. I’ve followed Lewis closely since he revived Tesco in 2014, cleaning up after Philip Clarke’s failed tenure. Before that, he was at Unilever for 30 years.
At Tesco, Lewis talked to staff, customers and suppliers, then rolled up his sleeves and fixed the fundamentals at speed. He’s willing to take firm action, being dubbed ‘Drastic Dave’ for slashing costs at Tesco. That’s the type of leadership Diageo needs right now. He was knighted in the New Year’s Honours List in 2020 for services to the grocery trade.
After leaving Tesco in 2020, he took on the chair of FTSE 100 company Haleon in 2022, helping establish it as an independent listed business. Diageo describes him as a “proven chief executive with extensive marketing and brand-building experience”, and the market’s already reacted, lifting the share price 7% on the announcement of his appointment. As I suspected it would the moment I saw the news.
FTSE 100 opportunity
One man can’t solve every problem. Diageo faces two major structural threats as young people drink less, and the rise of appetite-suppressing weight-loss drugs could hit alcohol consumption too. These challenges are already reflected in the shares, with the price-to-earnings ratio down to around just 13.8 today.
The company also needs an end to the cost-of-living crisis, and for the US to avoid recession, to put money in people’s pockets and let them start having fun again. Lewis will have to manage stocking issues, drive cost savings, motivate staff and redirect strategy, but he has a proven track record at this stuff.
Long-term potential
I’m cautiously optimistic. There’s still plenty of room for growth, both in emerging markets and in premium spirits, and the right CEO could unlock it. There’s also a handy 4.3% trailing dividend yield. Investors might consider buying it today, but only with a long-term view.
The turnaround won’t happen overnight, but with Lewis at the helm, and a fair wind, the recovery could now be on.
