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Diageo has announced a significant increase in its cost savings target as part of its ongoing Accelerate programme, now aiming for approximately $625 million in savings over the next three years.

This marks a $125 million increase from the original target of $500 million set earlier this year, reflecting the company’s strategic drive to enhance operational efficiency and bolster growth amid a challenging economic landscape.

Interim CEO Nik Jhangiani, who stepped into the role following Debra Crew's departure last month, highlighted that the Accelerate programme is not solely focused on cost-cutting but also aims to foster better growth and streamline investments.

"Accelerate is not just about cutting costs; it’s about driving better growth, prioritising where we invest and building stronger capabilities," Jhangiani said during the announcement of Diageo’s annual results.

The decision to raise the savings target comes as Diageo navigates a complex market environment characterised by fluctuating consumer behaviour and heightened competition.

The company reported a slight decline in reported net sales to $20.25 billion, impacted by foreign exchange fluctuations and other adjustments. However, organic net sales grew by 1.7%, driven by both volume and pricing strategies.

In outlining the focus areas for the increased savings, Jhangiani highlighted the need for more efficient trade investments and a structured approach to advertising and promotional spending.

"We need to link our investments in a more structured way, through the line," he said, indicating a shift towards optimising marketing expenditures to enhance commercial execution.

While Jhangiani acknowledged that the cost-saving measures may involve some job reductions, he clarified that the initiative is primarily about reallocating resources to drive reinvestment in the business.

"Yes, there will be some job cuts, but this is about freeing up resources and dollars where we can reinvest for the business," he explained, suggesting that the overall aim is to enhance operational capabilities rather than merely reduce headcount.

For the fiscal year ending June 30, 2025, Diageo experienced a 39.1% drop in reported net profit, which fell to $2.54 billion, alongside a 27.8% decrease in reported operating profit to $4.34 billion.

In light of these results, the company anticipates organic sales growth in fiscal 2026 to remain consistent with fiscal 2025 levels, with mid-single-digit growth in organic operating profit expected, particularly skewed towards the latter half of the year.

Regional performance varied, with Asia-Pacific facing challenges, particularly in Greater China and Southeast Asia, where organic net sales declined by 3.2%. In contrast, Diageo saw growth in North America, where organic net sales increased by 1.5%.