The “Drastic Dave” Era
Diageo still Shrinking for Growth in 2026
In the opening weeks of 2026, the global spirits industry witnessed a seismic shift in strategic direction from Diageo Plc, the world’s largest premium drinks company. Following a sustained period of share price underperformance and volatile trading conditions in key markets, the company has reportedly initiated a comprehensive review of its assets in Greater China, specifically targeting its majority equity stake in the Shanghai-listed baijiu producer, Sichuan Swellfun Co. Ltd. This strategic maneuver coincides directly with the ascent of Sir Dave Lewis to the role of Chief Executive Officer, effective January 1, 2026, a leader whose reputation for ruthless portfolio rationalization and cost discipline precedes him.
The review, which Bloomberg reports is being conducted in concert with investment banks Goldman Sachs and UBS, places a tentative “For Sale” sign on Diageo’s approximately 63% holding in Swellfun, an asset currently valued by the public markets at roughly CNY 19 billion ($2.7–$2.9 billion). This development is not an isolated event but rather a component of a broader, aggressive streamlining strategy that has already seen the company agree to divest its substantial African beer assets—specifically its stake in East African Breweries to Asahi Group for $2.3 billion.
This extensive research report provides a deep-dive analysis into the drivers, mechanics, and implications of this potential divestiture. It posits that the sale is driven by a convergence of three critical vectors: the “Lewis Doctrine” of capital efficiency, a structural deterioration in the Chinese “white spirits” market characterised by negative pricing power, and an increasingly hostile geopolitical trade environment exacerbated by the return of tariff-heavy US foreign policy in 2025/2026. While the divestiture promises to unlock billions in shareholder value and deleverage the balance sheet, it simultaneously raises profound questions regarding the long-term growth viability of a global spirits major without a manufacturing foothold in the world’s largest alcohol market.
