Coverage of Diageo's latest FY26 results focused on its CEO's US$1 billion restructuring plan and the thousands of jobs at risk. Hopefully not too many in Scotland where Scotch was the best performing spirit in Sir Dave's drinks cupboard, reports Tom Bruce-Gardyne …

It was annual results day at Diageo last Thursday, and framed by a poster of Johnnie Walker Blue Label, the CEO Sir Dave Lewis hosted a brief online press conference. He shared a few thoughts on the twelve months to June, before inviting questions.

"I was very pleased with some of the performance in Latin America, Africa and parts of South East Asia and parts of Europe," he began. "It's still very clear there's a job of work to be done in North America."

"We will maintain our focus on premium – it's done very well for us. It's been a great value creator. But we also intend to activate a portfolio that is broader than that so we can actually serve more customers on more occasions, and do that through the lens of a category strategy and not just a brand strategy."

A year ago, cuts of US$625 million were announced by interim CEO Nik Jhangiani, now back at his former role as Diageo's finance chief. Under Dave Lewis, that has been boosted to a billion dollars over the next three years as part of his big restructuring plan. Inevitably there has been much talk of job cuts.

With a record US$514m set aside for severance payments, the FT's Madeleine Speed wanted to know how many employees would be laid off. Sir Dave refused to talk numbers, but claimed there was widespread acceptance within Diageo that there was "a very large amount of duplication" and that "things needed to change." He insisted the company's "winning culture" would survive.

Scottish trade unions are saying that 38 jobs will go at the company's malt distilleries, and that 172 employees in Scotland have been told their jobs are at risk. With analysts predicting Diageo's global workforce of around 30,000 could be cut by as much as 5,000 according to the FT, Scotch whisky may have got off lightly.  

But deservedly so given these results. Scotch accounts for a third of all Diageo's spirits, and was clearly the best performing category with reported net sales up by an impressive 5%. Apart from rum (+2%) and gin (+1%), everything else went into reverse. Tequila was down 16%, Canadian whisky fell 15% and US whiskey 8%, while Chinese white spirits imploded by almost half.

Diageo's US spirits saw net sales tumble 11.5% driven by some big falls in Don Julio and Casamigos tequila and Crown Royal Canadian whisky. Scotch whisky fell by only 1.1%, while Johnnie Walker even managed some modest growth of 1% in the US. The results' presentation added that "single malts, offset by Buchanan's (which happens to be a blend) were down 7.3%".

I asked Sir Dave about this key market, and where Scotch fits in. "When I look at our US business, I see there's been some weakness in our core brands for a number of years that has been covered up by the growth of tequila," he explained. "Crown Royal, Smirnoff and Captain Morgan – these are very big, important brands, that quite frankly we have not done a great job with. We obviously need to recover the momentum in tequila. We're confident we can do that, but it won't be overnight."

"When you talk about Scotch, you've got to remember our biggest Scotch brand in North America is Crown," he said. This may have been a simple slip of the tongue, but perhaps it's all just 'whisky' at Diageo Towers whether it is from Canada, Speyside or Kentucky.

"The Scotch whisky market continues to grow globally, it grows very nicely and we continue to grow our share of Scotch whisky around the world," he said. "It's still a very big, very important category for us, but the dynamics in North America are a little bit different because of Crown Royal."

The thought of the market growing "very nicely" would be news to many in the industry – if only it were true. As for the focus on Crown Royal, and its core 'Deluxe' expression, it is Diageo's second biggest brand in the States as its North America president, John O'Keeffe, explained in the Capital Markets Day presentation that followed the results.

By throwing money at its new 'Bring It' campaign, by dumping its cheap plastic stopper and "dialling up the iconic deluxe purple" (of the packaging), O'Keeffe declared "our number one strategic priority on Crown Deluxe is to stop the haemorrhaging and to hold on to those loyal consumers."

But why not treat them to something better, and trade them up to Buchanan's or Johnnie Walker? And, while you are about it, why not finally launch a serious Scotch whisky RTD? Single serve, spirits-based RTDs have been booming in the US. In fact, they now represent the country's top-selling category of spirits bar none.

When I put this to Dave Lewis, he appeared to be as puzzled as I am. "Let's keep it simple," he said. "If 50% of Scotch, or 'whisky', is drunk with some other cocktail accompaniment, then the opportunity to provide some of that in a fantastic drink surely exists in Scotch as it does in other categories." Hopefully, those in brand innovation still on the Diageo payroll are listening.