Diageo boss Lewis must convince sceptics as he unveils big reset on Thursday
Published: 09:01 04 Aug 2026 EDT
Diageo PLC (LSE:DGE) faces a difficult task convincing investors that its turnaround can revive sales without sacrificing profitability when it reports annual results and presents its new strategy on Thursday, according to JPMorgan.
Eight months after taking charge, chief executive Dave Lewis is expected to outline a reset aimed at making the Johnnie Walker and Smirnoff maker more competitive as it enters the 2027 financial year.
JPMorgan analyst Celine Pannuti said the capital markets day would be "a test of Diageo's fighting spirit" amid scepticism over the pace of recovery.
Investors will be looking for detail on price reductions designed to restore volume growth, the length of the US turnaround and plans to expand beer and ready-to-drink products.
Pannuti is less worried than the market about deep, broad-based price cuts but sees persistent volume weakness as the bigger concern.
She estimates Diageo could identify $1 billion of gross cost savings to fund investment without requiring a major reset to margins.
For the 2027 financial year, the JPMorgan analyst expects Lewis to give cautious guidance on revenue returning to growth, against consensus forecasts of a 1.6% increase.
Guidance for flat organic operating profit would probably be welcomed, she said.
Other banks have been more downbeat in recent weeks, with Deutsche Bank expecting a "substantial reset" to profitability targets, forecasting a 0.3% revenue decline and a 9.3% drop in operating profit next year.
UBS believes US spirits sales could fall 7%, compared with the market's forecast of a 3% decline, as price reductions spread beyond Casamigos to brands including Smirnoff and Captain Morgan.
JPMorgan's Pannuti believes cost savings should support earnings, but warned that a "lack of excitement" around the top-line recovery "should limit opportunities for a rerating" of Diageo shares.
