Global spirits producer Diageo has announced it expects to face a $150 million annual hit as a result of ongoing U.S. tariffs, while simultaneously rolling out a sweeping $500 million cost savings program aimed at reinforcing its business resilience and fueling future growth.
The company, which owns renowned brands like Johnnie Walker and Casamigos, based its projections on the assumption that U.S. tariffs on imports from the U.K. and EU will remain at 10%. Imports from Mexico and Canada are not expected to be affected, as they remain exempt under the current United States-Mexico-Canada Agreement. Diageo also clarified that tariffs on Chinese goods would have no significant impact on its operations.
To cushion the blow, Diageo said it will be able to offset about half of the expected tariff-related costs by leveraging its current cost management strategies, before implementing any product price increases.
Alongside these mitigation efforts, Diageo unveiled an ambitious $500 million cost savings plan set to unfold over the next three years. The initiative is designed to boost reinvestment opportunities in the company’s growth and enhance operating leverage, supporting Diageo’s continued expansion in a challenging global landscape.
This announcement comes as Diageo reported a 5.9% increase in third-quarter organic net sales, reaffirming its full-year financial guidance despite the turbulent market environment.
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