Highlights
- World's largest spirits maker reportedly reviewing Chinese operations including 63 per cent stake in Shanghai-listed Sichuan Swellfun.
- New CEO Dave Lewis, known as "Drastic Dave ", for cost-cutting, took over on January (1) following portfolio streamlining moves.
- Company flagged double-digit sales decline in China in November while struggling with Trump tariffs and changing consumer habits.
Diageo is reportedly considering selling its Chinese assets as new chief executive Dave Lewis moves swiftly to trim the spirits giant's portfolio amid falling sales in the world's second-largest economy.
The maker of Guinness, Johnnie Walker, Smirnoff vodka and Captain Morgan rum is working with Goldman Sachs and UBS to review its operations in China, according to Bloomberg News.
The banks have been sounding out initial interest from Chinese strategic buyers and private equity firms.
Diageo's assets in the country include a stake of more than 63 per cent in Shanghai-listed Sichuan Swellfun, which distributes the distilled spirit Baiju.
Shares in the Chengdu-based company have dropped 14 per cent in the past year, giving it a market value of 19.2bn yuan (£2bn).
Leadership and strategy
Lewis, a former Tesco chief executive who took the reins at London-based Diageo on January (1), earned the nickname "Drastic Dave" during his nearly three decades at Unilever for his aggressive cost-cutting.
He later revived Tesco, Britain's biggest supermarket chain, after a damaging accounting scandal, slimming down its international arm, closing unprofitable divisions and slashing thousands of jobs.
The company is struggling with the impact of Donald Trump's tariffs, high debt levels and consumer shifts, as many younger people choose to drink little or no alcohol. In November, Diageo flagged a double-digit sales decline in China.
The potential sale continues Diageo's portfolio streamlining efforts. Last month, the company announced the sale of its 65 per cent stake in East African Breweries for $2.3bn (£1.7bn), offloading its last direct African beer operation.
Lewis took over from Debra Crew, a former captain in US military intelligence, who was appointed as chief executive in 2023 after the untimely death of the highly regarded Ivan Menezes.
Crew's tenure was marked by a shock profits warning later that year caused by supply issues in Latin America, as cash-strapped customers in the region consumed less alcohol and sought cheaper brands.
There were further supply problems in the run-up to Christmas last year—this time a shortage of Guinness, when UK pubs complained that their flow of the "black stuff" had been rationed.
Diageo declined to comment.
