Diageo, the powerhouse behind iconic brands like Guinness and Johnnie Walker, is bracing for a sharp financial blow due to lingering US tariffs imposed during Donald Trump’s presidency.
The drinks titan now expects the annual cost of those tariffs to rise to a staggering $200 million (£155 million), up from its earlier estimate of $150 million.
Despite this mounting pressure, Guinness remains one of the company’s most resilient performers, continuing to deliver solid sales at home and abroad.
“We expect to absorb around half the tariff impact through improved supply chain operations and more efficient inventory control,” Diageo stated.
The fiscal year ending in June painted a challenging picture. Diageo’s operating profit dropped by almost 28%, a sharp decline that has spooked investors and sent the company’s shares tumbling more than 25% since the beginning of 2025. It’s now among the poorest performers on the FTSE 100.
Adding to the headwinds, the company is grappling with a shift in consumer habits. Young adults are drinking less, and when they do, many opt for cheaper alternatives – a trend fuelled by ongoing economic uncertainty and cost-of-living pressures.
Amid this, Diageo also faced internal upheaval. CEO Debra Crew departed abruptly last month, after just over a year at the helm, following a string of disappointing results.
“Her departure has raised eyebrows and fuelled speculation over the board’s direction during a pivotal period for the company,” said one analyst close to the situation.
Chief Financial Officer Nik Jhangiani has stepped into the CEO role on an interim basis and wasted no time ramping up cost-cutting efforts. Originally pegged at £500 million, Diageo’s savings plan has now been extended to £625 million over the next three years.
“These savings won’t be achieved solely through job cuts,” Jhangiani assured stakeholders.
As Diageo battles declining profits, shifting consumer behaviour and executive shake-ups, its £155 million annual tariff burden underlines the challenges global firms still face from Trump-era trade policies.
Not everything in Diageo’s portfolio is under pressure. Guinness continues to thrive, with UK sales rising by 6.7%.
However, supply issues have prevented even stronger growth. There’s also notable demand for Don Julio tequila and Crown Royal Blackberry in North America – offering hope that certain premium products can still capture consumer interest.
The company forecasts organic sales growth of around 1.7% – a repeat of last year’s result, but still modest in the current climate.
Diageo remains without a permanent CEO as the search continues for someone capable of steadying the ship and reigniting investor confidence.
The incoming leader will have their work cut out: calming nervous markets, responding to shifting global trade dynamics, and appealing to a new generation of increasingly cautious drinkers.
