Diageo marketing is at the ‘leading edge’ of its turnaround, says CEO Dave Lewis

Diageo chief executive Sir Dave Lewis says marketing is leading the drinks giant’s turnaround. Speaking to investors on 5 November, as the company reported first-quarter results, Lewis said the business had “rewired” how it operates and that marketing was at “the leading edge” of that change, as Marketing Week reported. The comments come nearly a year into his time as CEO, and after a year in which Diageo cut its marketing budget by 13%.

What Lewis said

Lewis pointed to new category strategies and a different way of thinking about brands and innovation. He admitted the organisation is still learning, estimating that 80% of the new way of working is succeeding while the other 20% needs a second attempt. He also stressed there would be no major repositioning of prices across the portfolio, only what he called precise, portfolio-specific work to keep Diageo competitive.

The numbers were modest. Reported net sales rose 1.2% to $4.9bn (£3.7bn) in the three months to 30 September, with organic growth of 0.6%, which Lewis called a small step in the right direction. North America remains the biggest problem, with organic sales down 3.6%, while Europe, the Middle East and Africa grew 2.4%.

Guinness grew by double digits in the quarter and was described as a powerhouse for the group, although summer heatwaves hit stout sales in Great Britain and Ireland. Lewis also acknowledged that the brand’s success has drawn rivals into the category. Diageo is still assessing its first World Cup sponsorship, as the tournament’s first official spirits supporter, and Lewis said it had shown sponsorship platforms deserve a place in the marketing mix.

Why it matters

There is an obvious tension in a CEO calling marketing the engine of a turnaround while spending less on it. Diageo cut almost 2,000 roles in June and is targeting $1bn in cost savings, and Lewis described the 13% budget reduction in August as an effort to “right-size” the investment. His argument is that structure and focus matter more than volume: fewer, sharper category strategies rather than more money spread across every brand.

Guinness is the proof he will lean on. The brand’s run, driven by work that has kept it at the centre of British pub culture and covered in our ranking of Guinness adverts, is the clearest case inside Diageo that consistent brand building pays. It is no accident that Anna MacDonald, the marketer behind the Guinness revival, is now marketing and category director for Diageo Great Britain, with the job of applying that thinking more widely.

The risk is that a smaller budget and a reorganised team take longer to show results than investors will wait. Consumer goods giants have been raising the share of sales they put into advertising, as WARC found last month, so Diageo is pulling back while rivals push forward. The test will be whether Guinness’s momentum can survive more competition, and whether brands such as Smirnoff, which grew 15% in ready-to-drink sales, can build some of their own.