Diageo plc Stock Outlook December 2025: Profit Warning, New CEO and What Comes Next for DGE & DEO

Updated: 3 December 2025 – informational only, not investment advice.

Where Diageo’s Share Price Stands Today

Diageo plc, the Guinness and Johnnie Walker owner listed in London as DGE and in New York as DEO, is limping into December after one of its roughest stretches in a decade.

On 3 December 2025, Diageo’s London-listed shares traded around 1,730p, having closed at 1,729p with a gain of 1.83% on the day. ^[1]
That leaves the stock roughly 34% below its 52‑week high of 2,619.5p and only modestly above its 52‑week low of 1,664p. ^[2]
In New York, the DEO ADR recently closed at about $91.76, implying a price/earnings ratio of around 21.7x based on trailing 12‑month EPS of $4.23. ^[3]

Commentators have not been kind: one recent UK piece described Diageo as having become “the laughing stock of the FTSE 100” after a 26%+ share price slide over the past 12 months, and other analysis notes a drop of more than 50% from its multi‑year peak. ^[4]

The question for investors now is whether this is the end of a long hangover or the start of a more fundamental de‑rating.

A Challenging FY25: Modest Growth, Profit Pressure, Rising Debt

Diageo’s fiscal 2025 year (to 30 June 2025) was already signalling trouble before the more recent profit warning.

From the company’s preliminary results and annual report: ^[5]

Organic net sales grew just 1.7%, driven by 0.9% volume growth and 0.8% positive price/mix.
Organic operating profit fell 0.7%, highlighting margin pressure.
Free cash flow rose slightly to $2.7bn, while net cash flow from operations reached $4.3bn.
Net debt stood at $21.9bn, with a leverage ratio of 3.4x net debt to adjusted EBITDA, at the top end of the company’s own 3.3–3.5x guidance range. ^[6]

On the positive side, management recommended a full‑year dividend of 103.48 US cents per share, continuing Diageo’s long‑standing record of annual dividend increases. ^[7]

However, that rising dividend has been financed against a backdrop of slowing growth and debt that is high by the company’s historical standards. Some commentators have begun asking bluntly whether a dividend cut could eventually be on the table, given the 3.4x leverage and weakening earnings, even if there is no immediate signal from management. ^[8]

Q1 FY26 Trading Statement and the November Profit Warning

The real jolt for the share price came with Diageo’s Q1 FY26 trading statement and guidance cut on 6 November 2025.

From Diageo’s own Q1 release and subsequent media coverage: ^[9]

Q1 FY26 (quarter to 30 September 2025)
- Reported net sales: $4.875bn, down 2.2% year‑on‑year.
- Organic net sales were flat, with volume +2.9% offset by price/mix –2.8%.
- Solid organic net sales growth in Europe, Latin America & Caribbean (LAC) and Africa was offset by a sharp decline in Chinese white spirits and softer trends in North America.
- Management estimated that weakness in Chinese white spirits alone reduced group net sales by about 2.5 percentage points in the quarter.
Regional highlights
- North America: organic net sales down 2.7%; US spirits down 4.1%, with tequila in double‑digit decline amid tough comparisons and fierce price competition. ^[10]
- Europe: organic net sales up 3.5%, driven by strong Guinness, Baileys and Scotch performance, plus pricing in Türkiye. ^[11]
- Asia Pacific: organic net sales down 7.5%, with double‑digit declines in Chinese white spirits and a 12.8% drop in price/mix. ^[12]
- Latin America & Caribbean: organic net sales up 10.9%, led by Brazil.
- Africa: organic net sales up 8.9%, with strong growth in East Africa and South, West & Central Africa.
New FY26 outlook
Diageo now expects:
- Organic net sales growth in FY26 to be flat to slightly down.
- Organic operating profit growth to be only low to mid single digits, despite cost‑cutting efforts. ^[13]

Reuters summarised the impact bluntly: the guidance cut sent the shares to a level last seen in 2015, with the stock already down nearly 30% year‑to‑date at that point. ^[14]

The Q1 statement reaffirmed the company’s “Accelerate” programme, targeting around $625m of cost savings over three years, a figure Diageo lifted earlier in 2025 as US tariffs and softer demand increased pressure on profits. ^[15]

Leadership Upheaval: From Debra Crew to “Drastic Dave” Lewis

The operational wobble has been accompanied by serious boardroom turbulence.

On 16 July 2025, Diageo announced that CEO Debra Crew had stepped down with immediate effect, by mutual agreement, after a difficult tenure marked by a sharp sales slump in Latin America and sliding investor confidence. CFO Nik Jhangiani was appointed interim CEO, while the board launched a search for a permanent replacement. ^[16]
Later in July, Diageo brought back former finance chief Deirdre Mahlan as interim CFO, freeing Jhangiani to focus on the turnaround in his interim CEO role. ^[17]

After months of uncertainty, the board named Sir Dave Lewis — the former Tesco chief executive, famous in the City as “Drastic Dave” for his ruthless but effective turnaround of the supermarket chain — as Diageo’s new CEO, effective 1 January 2026. ^[18]

The appointment was well received:

Diageo shares jumped around 5%+ on the announcement, their biggest one‑day gain in years, though from depressed levels. TS2 Tech+1
Financial press commentary suggests investors expect Lewis to:
- Rationalise Diageo’s 200‑plus brand portfolio, potentially selling weaker labels.
- Revisit the group’s ~€10bn minority stake in Moët Hennessy.
- Use his cost‑discipline playbook to accelerate cash generation and bring leverage down from roughly $22bn of net debt. TS2 Tech+2Financial Times+2

The flip side: expectations are now high. Turning a sprawling global spirits group in a structurally slower‑growing alcohol market is a very different challenge from fixing one UK supermarket chain.

Dividend, Yield and Leverage: Reward vs Risk

For income‑focused investors, the share price slide has turned Diageo into a genuinely high‑yielding blue chip:

On the London line, the trailing dividend yield is currently quoted at around 4.5–4.7%, near the top of its 12‑month range. ^[19]
On the US ADR, the trailing dividend payout is around $4.95 per share, for a yield near 5.4% at recent prices. ^[20]

The company confirmed the sterling equivalent of its latest final dividend in November:

Final dividend: 62.98 US cents per ordinary share.
Sterling equivalent: 47.91p per share, based on an exchange rate of $1 = £0.76072. ^[21]

That payment, due around 4 December 2025, brings the full FY25 dividend to 103.48 US cents per share. ^[22]

The catch is leverage and payout:

Net debt of $21.9bn and a 3.4x net‑debt/EBITDA ratio leave Diageo more indebted than many consumer‑staples peers. ^[23]
Several data providers estimate that the dividend payout ratio is close to the high end of the 60–70% range on earnings, and that free‑cash‑flow yield (about 5–5.5%) is not much higher than the dividend yield — implying much of the free cash flow is being returned to shareholders rather than used to accelerate deleveraging. TS2 Tech+1

That combination explains why some recent analysis has started openly debating whether the dividend can continue to grow at historical rates if earnings disappoint further, even if an outright cut still looks avoidable for now.

Short‑Term Technical Picture: Still a Downtrend

From a pure chart‑based, short‑term trading perspective, Diageo doesn’t yet look like a clean turnaround.

Technical analysis platform StockInvest.us currently: ^[24]

Classifies DGE.L as being in a “wide and falling trend”.
Recently downgraded its view from Hold to Sell, noting several negative technical signals.
Highlights that as of 2 December 2025, the stock closed at 1,724.5p, down from the 52‑week high of 2,619.5p and not far above key support levels around 1,716.5p.

TipRanks’ auto‑generated summary similarly notes bearish technical momentum on the US ADR, even as its longer‑term valuation metrics and dividend yield keep some fundamental investors interested. ^[25]

In other words, the market has not yet signalled that the downtrend is definitively over, despite the recent bounce.

Analyst Ratings and 12‑Month Price Targets

Analyst opinion is more constructive than the charts, but hardly euphoric.

London listing – DGE

According to Investing.com’s consensus for Diageo on the London Stock Exchange: ^[26]

Consensus rating: Buy, based on 21 analysts.
- 13 Buy, 7 Hold, 2 Sell.
Average 12‑month price target: 2,165p.
- Implies ~23% upside from current levels.
- High estimate: about 2,686p.
- Low estimate: about 1,586p.

Recent broker moves reflect a mixed but not disastrous picture:

Deutsche Bank: Hold, target 1,840p.
JPMorgan: Hold, target 2,500p.
Morgan Stanley: Sell, target 1,740p.
Bernstein/SocGen: Buy, targets around 2,420–2,550p. ^[27]

New York ADR – DEO

On the NYSE, MarketBeat’s summary for DEO shows: ^[28]

Consensus rating: effectively Hold, from about 10 analysts (a mix of Buys, Holds and Sells).
Average 12‑month price target: about $119, implying roughly 30% upside from around $92.
Individual targets cluster between $109 and $129.

StockAnalysis’ aggregation of analyst forecasts suggests: ^[29]

Revenue is expected to grow only 2.8–3.5% annually over the next couple of years after a flat FY25.
EPS is forecast to rebound sharply in FY26 from a depressed FY25 base (which included restructuring and impairment charges), then grow mid‑single‑digit thereafter.

Overall, the Street seems to see Diageo as undervalued relative to long‑term earnings power, but not a high‑growth story: upside comes from stabilisation, cost savings and modest growth rather than any dramatic expansion in the spirits market.

Operational Flashpoints: Strikes, Tariffs and Changing Drinking Habits

Belfast strike and Guinness supply

In late November, unions representing workers at Diageo’s Belfast packaging site, a key facility for Guinness and Guinness 0.0, voted for an eight‑day strike in December over pay. ^[30]

Tabloid coverage has warned of a potential Guinness shortage in the UK over Christmas, but Diageo has publicly played down the risk, saying it has contingency plans and does not expect any disruption to Guinness or Guinness 0.0 supply during the holiday period. ^[31]

From an investment standpoint, this looks more like a short‑term operational nuisance than a thesis‑changing event — unless industrial action were to spread or extend materially.

Tariffs and regulatory risk

Financial Times reporting in mid‑2025 highlighted how US tariffs on UK and EU spirits are hurting Diageo’s operating profit, with management estimating an impact of about $200m, up from a previous $150m assumption. ^[32]

At the same time, Diageo is dealing with:

Tax changes in India (e.g. in Maharashtra state), which have lifted duties on certain spirits and triggered legal challenges by the industry. TS2 Tech+1
Ongoing debates over alcohol regulation and marketing in multiple regions, including Latin America and parts of Asia.

These factors add macro and policy risk on top of the cyclical slowdown in demand.

Shifting consumption patterns

Multiple analysts and commentators point to a few structural headwinds: ^[33]

Declining or flat alcohol consumption in several developed markets.
Trading down by price‑sensitive consumers amid higher living costs.
Intense competition in once‑hot categories such as premium tequila.
Growth of no‑ and low‑alcohol (“NoLo”) alternatives, where Diageo participates but faces nimble new competitors.

Guinness and Baileys remain bright spots, and Diageo is investing in non‑alcoholic variants like Guinness 0.0, but the overall category growth profile is slower than in the pre‑pandemic boom years.

Bull vs Bear Case for Diageo Going into 2026

Putting all of this together, the December 2025 investment debate around Diageo looks something like this.

The bull case

Supporters argue that:

The share price already discounts a lot of bad news: down 25–30% over 12 months and far off its highs, with a valuation multiple now more in line with slower‑growth consumer staples. ^[34]
The brand portfolio is exceptional, anchored by Guinness, Johnnie Walker, Smirnoff, Don Julio, Baileys and others that still have strong consumer resonance. ^[35]
The dividend yield around 4.5–5.5% provides substantial income, with a multi‑decade record of annual increases. ^[36]
The “Accelerate” cost‑saving programme and portfolio rationalisation under Dave Lewis could lift margins and free cash flow, supporting both deleveraging and shareholder returns. ^[37]
Consensus analyst targets show low‑ to mid‑20% upside over the next 12 months if the company executes reasonably well. ^[38]

From this angle, Diageo starts to look like a “quality at a discount” story: a global consumer‑staples leader temporarily mis‑priced due to cyclical and self‑inflicted issues.

The bear case

Sceptics counter that:

Guidance has already been cut, and FY26 sales are expected to be flat or slightly lower, with only low‑to‑mid single‑digit operating profit growth — hardly a growth stock profile. ^[39]
The company is heavily exposed to slow or shrinking categories (spirits in mature markets) and must work harder to offset this with growth in regions like LAC and Africa. ^[40]
Leverage remains elevated, limiting flexibility if another downturn hits or if interest rates stay higher for longer. ^[41]
The dividend payout is edging towards the upper limit of what earnings and free cash flow can comfortably sustain while deleveraging, making future growth in the dividend less certain. TS2 Tech+2MacroTrends+2
Short‑term technical signals are still negative, suggesting the market has not yet fully regained confidence, even after the CEO announcement bounce. ^[42]

From this viewpoint, Diageo is less a classic bargain and more a value trap in the making if consumer trends and margins do not stabilise.

Bottom Line: A Blue‑Chip Turnaround with Real Execution Risk

As of 3 December 2025, Diageo sits at a crossroads:

The share price is well below prior peaks, but not obviously distressed.
The company is cash‑generative with iconic brands and a big new cost‑saving plan, yet earnings growth is anaemic and leverage high.
A respected new CEO with a turnaround track record arrives in January 2026, but must confront structural headwinds and impatient shareholders.

For investors following DGE or DEO, the next 12–18 months will likely hinge on a few key questions:

Can Dave Lewis quickly demonstrate tangible progress on margins, portfolio simplification and debt reduction?
Will the US and China stabilise, or will weakness in those core markets deepen?
Can Diageo protect — and carefully grow — its dividend without sacrificing balance‑sheet strength?
Will the market reward Diageo for behaving like a resilient, income‑generating “bond proxy”, or continue to punish it for no longer being a high‑growth spirits story?

Whichever way you lean, Diageo has moved from a sleepy defensive stalwart to a genuinely controversial stock — and that, in itself, is why it has suddenly become one of the most closely watched names in the FTSE 100.