Dive Brief:

• London-based spirits brand Diageo announced Coca-Cola veteran Nik Jhangiani will step into its CFO seat in autumn of this year, according to a Friday press release.
• The company’s current finance chief, Lavanya Chandrashekar, will step down both as CFO and as a member of the board at that time, after serving for three years in the role, the company said.
• The company did not provide a specific date for when Jhangiani will take the seat. Diageo anticipates “a smooth transition, with Lavanya staying with Diageo until the Autumn when we look forward to welcoming Nik to the company,” a company spokesperson told CFO Dive via email. The company declined to provide further comment beyond the details included in the press release.

Dive Insight:

Jhangiani is currently serving as SVP and CFO for Coca-Cola Europacific Partners, the world’s largest Coca-Cola bottler, according to the Friday release. He has held the role for eight years, and has held various top financial and executive roles for numerous Coca-Cola enterprises and partners throughout his 20-year tenure with the beverage brand, according to his LinkedIn profile.

The maker of spirits including Guinness Draught, Johnnie Walker whisky and Tanqueray gin, Diageo is tapping the Coca-Cola alum as CFO after struggling with a slowdown in both sales and profit.

In November, the company warned that it expected to see sales in Latin America and the Caribbean (LAC) decline by more than 20% year-over-year for the first half of fiscal 2024, thanks in part to macroeconomic pressures which are contributing to “lower consumption and consumer downtrading,” Diageo said. Slumping sales in the LAC region, increased trade investment and other factors were also expected to drive down profit for the first fiscal half of the year, the spirit maker warned.

The profit warning sent Diageo’s share price tumbling by more than 15%, as newly-minted CEO Debra Crew struggled to convince investors that the company’s issues were isolated to the LAC region, which accounts for 11% of its total sales volume, according to a Financial Times report at the time. Crew took the CEO and president roles in June 2023, following the death of Diageo’s previous CEO Sir Ivan Menezes.

The company faced a “perfect storm” in the LAC region, “because we were coming off of this COVID super cycle,” Crew said in January when Diageo reported results for the first half of its fiscal 2024. Diageo reported a 23% slump in organic net sales for the LAC region, with total net sales declining 1.4% to $11 billion, according to a company release.  

Diageo first experienced rapid growth in the region, with it becoming bigger and “frankly more material” to the company in a short time span, Crew said.

“And so hindsight being 20/20, as we looked at the resourcing and the robustness of some of the models down there, we certainly have taken a look at that and said this isn't good enough,” she said in response to analyst questions during the earnings call. “And so that's where we're making some additional investments and making sure that really these models are much more robust.”

For the fiscal half year ended Dec. 31, 2023, operating profit slumped by 11% to reach $3.3 billion, the spirits brand said. As well as a slump in LAC sales, Diageo also reported a 1.5% sales dip in North America, its biggest market, though this represented sequential improvement from the prior year period, the company said.

Diageo and the wider spirits industry are facing changing consumer taste and spending following the pandemic, with many consumers shifting to cheaper brands in the face of rising prices or, in the case of younger generations such as Gen Z, cutting back on alcohol consumption in favor of non-alcoholic alternatives. In the U.S., spirit sales outpaced those for wine and beer for 2023, yet only grew 0.2% to $37.7 billion, according to a recent CNBC report citing data from the Distilled Spirits Council of the U.S.