Diageo announces operational review

Diageo, the world’s biggest alcohol company, has announced a major review of its operating model and changes to its executive committee in a move that looks destined to lead to job cuts across the company.

Paul Walsh, chief executive, said the changes are designed to “focus on growth and create a more cost-effective organisation.”

As a result of the changes to the company’s structure, chief customer officer Ron Anderson and Stuart Fletcher, president of Diageo International, have announced their resignation from the company.

The full statement from Walsh said: “The regional variation in the pace of economic growth has created significant change and new opportunities for Diageo as a global business.

“In order to capture these opportunities Diageo has begun a review of our operating model across the business to ensure that all our resources are deployed closer to the market and in those areas where the potential for growth is greatest.  

“This review will encompass changes to our regional structure and to the way we organize our central functions. Yesterday we announced an employee consultation process on significant changes which are proposed to our organisation in Europe.

“Today we have announced a change to the current configuration of our International region and from 1 July 2011 we will have two autonomous regions; Diageo Latin America and Caribbean and Diageo Africa.

“The significant contribution which the Diageo International organisation has made to the development of these two regions has created the platform from which this change can be made. Stuart Fletcher as president of Diageo International led the success of the region and has shaped the changes we are announcing today.

"With this accomplished, Stuart has decided that this is the right time to leave Diageo. Stuart has been an outstanding colleague and while I am sad to see him leave Diageo I understand his ambition to use his considerable skill to lead a major organisation.

“As part of the change in how we organise our functions I have decided to put our central sales and commercial organisations within our in-market companies.

“As chief customer officer, Ron Anderson has built Diageo’s strong capability in this area and these skills are now embedded. Ron has also decided to leave Diageo. Diageo is indebted to Ron for the impact he has had on the business over many years and we are sorry to see him go.

“Both Stuart and Ron will remain with Diageo until the transition process has been completed which is likely to be in the middle of F12.

“Over the next few months we will consult with our employees on further changes to our operating model and I expect to make an announcement at our Prelims presentation in August as to the full extent of these changes.

"The main driver of these changes will be to focus on growth and create a more cost effective organisation.”

Alan Lodge, 25.05.2011