Since Diageo CEO Debra Crew stepped down “with immediate effect, by mutual agreement” last week, speculation has swept through the industry and finance sector about the reason for her departure.

While the news followed Diageo’s share price plunging by 45% in the two years since her appointment, the big question remains: how did things go so badly wrong so quickly? 

Diageo is not alone in facing challenging times. The drinks industry has seen declining sales due to cost-of-living pressures and global uncertainty from conflicts and tariffs.

As one banker told the Australian Financial Review: “Clearly she’s had a very difficult set of circumstances, and Diageo hasn’t done significantly worse than say, Pernod Ricard, in terms of financial results.

“[Diageo’s performance] has set up a debate around [whether] this is pressure on consumers, whether it’s low-income consumers or 21-year-olds who just don’t have enough money to buy booze, or if it’s more structural in that everybody’s decided either they don’t want to drink booze, or they’re taking skinny jabs and aren’t able to drink booze.”

Earlier this year Fundsmith investment manager Terry Smith revealed he sold his stocks in Diageo in 2024 because his firm suspects that the “entire drinks sector is in the early stages of being impacted negatively by weight-loss drugs”.

Crew was appointed as Diageo CEO in June 2023, having joined Diageo as a non-executive director in 2019, then serving as President of Diageo North America and subsequently as Group Chief Operating Officer.

She stepped into the top role when legendary Diageo CEO Sir Ivan Menezes announced his retirement, following 10 years leading the company. Sadly, Sir Menezes passed away soon afterwards.

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Campari experienced a negative 4.2% organic net sales growth in Q1 2025; Pernod Ricard’s FY25 Q3 net sales saw an organic decline of 3%; and Brown-Forman’s net sales decreased 5% in the year ended 30 April 2025.

Brown-Forman CEO Lawson Whiting blamed the company’s decreased profits on concerns about a possible recession leading consumers to cut back on premium alcohol, tariff wars, American spirits continuing to be largely off shelf in Canada and “the big three” – GLP-1 (Ozempic and other weight loss drugs), cannabis and lower alcohol consumption by Gen Z.

What’s next for Diageo?

The Diageo Board has begun a comprehensive formal search process to replace Crew, which will include consideration of internal and external candidates.

Until a permanent appointment is made, Chief Financial Officer Nik Jhangiani has assumed the role of Chief Executive Officer on an interim basis.

The Financial Times reported: “Debra Crew’s abrupt departure from Diageo this week came just days after she told its chair her position as chief executive had been made untenable by the board’s failure to quash speculation that finance boss Nik Jhangiani was angling for her job.”

Analysts expect Jhangiani to start acting on previously announced plans for “substantial” asset sales to cut debt.

“Clearly we see through our reviews that we’ve been doing internally and with the board some opportunities for what I would call substantial changes versus portfolio trimming,” he said during a presentation of Diageo’s Q3 2025 trading results.

“I can’t say any more than that but clearly it’s going to be above and beyond the usual smaller brand disposals that you’ve seen over the last three years.”

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