Chair's Statement

In February 2025, I was appointed as Chair of the Diageo Board after three and a half years as a Non-Executive Director, succeeding Javier Ferrán. I would first like to extend my sincere thanks to Javier, who led the Board with great dedication and stewardship.

Having been a member of the Board since 2020, I have a deep appreciation for the legacy of the company and its iconic brands, and I am committed to ensuring we do more to unlock the full potential of Diageo.

Over these last six months, I have spent extensive time with our leadership, colleagues, customers and stakeholders in almost every corner of the organisation around the globe. I have listened to their views and insights into Diageo, our industry and the broader consumer environment.

From our breweries in Ireland and our tequila operations in Mexico, to sales teams across Europe and the United States, and of course our historic scotch distilleries – what has stood out consistently is our unrivalled portfolio of brands, our truly global footprint, our fantastic brand-building capabilities and our dedicated workforce.

These distinctive qualities give me confidence in our abilities over the long-term. There is no question that current industry conditions are challenging, but we are taking steps with urgency to ensure Diageo is positioned to win in the short-term, and emerge stronger and more agile when conditions improve.

The macroeconomic and geopolitical environment continues to be challenging for the Total Beverage Alcohol (TBA) industry, as well as broader consumer goods, particularly in the United States and China. Over the past two years, consumer wallets and confidence have been under sustained pressure.

Despite this, Diageo delivered organic net sales growth in fiscal 25 of 1.7%, driven by organic volume growth of 0.9% and positive price/mix of 0.8%. Don Julio, Guinness and Crown Royal were the standout performers, seeing good growth in the year. Whilst there is clearly more to do, I am pleased that we are showing organic growth ahead of competition.

In a challenging year we kept the dividend flat, which we feel is prudent. This brings our full year dividend to 103.48 cents per share. This decision has been made with reference to performance trends and short-term macroeconomic and geopolitical pressures, and does not reflect reduced confidence in the long-term strength and growth potential of the business. Going forward, we remain committed to a progressive dividend policy.

This year, we launched and have made good progress on the initial phase of Accelerate, our company-wide programme to strengthen the business.

Accelerate is helping to drive a disciplined focus on cost management and consistent cash delivery, as well as strengthening our operating model, and improving commercial and digital capabilities. It is clear that we must do more to rebuild confidence and grow quality market share.

Whilst this is only the first phase of the programme, these changes are a vital opportunity to make Diageo a more efficient and agile company, delivering both more consistent growth and cash flow, as well as stronger shareholder returns.

In July, we announced that Debra Crew had stepped down as Diageo Chief Executive and as a Board Director. On behalf of Diageo and the Board, I would like to thank Debra for her many contributions to Diageo, including steering the company through the challenging aftermath of the global pandemic and the ensuing volatility.

The Board is engaged in a comprehensive search process for Debra’s successor, which includes consideration of internal and external candidates, to secure the best individual to lead Diageo and to take the company forward. Nik Jhangiani, Chief Financial Officer, has been appointed Interim Chief Executive until a permanent appointment is made. We are pleased that our former Chief Financial Officer, Deirdre Mahlan, has agreed to rejoin Diageo as Interim Chief Financial Officer.

Nik joined us as Chief Financial Officer in September 2024, bringing with him more than 30 years of finance experience gained in roles in the United Kingdom, Europe, India, Africa and the United States. This includes 20 years as a Chief Financial Officer, spending most of his career in consumer and beverage industries, including within the Coca-Cola system.

In addition, we were delighted to welcome Julie Brown in August 2024 as a Non-Executive Director and Chair of the Audit Committee, succeeding Alan Stewart. Julie currently serves as Chief Financial Officer of GSK plc and was previously Chief Operating and Financial Officer and Executive Director at Burberry Group plc. She has decades of experience in financial, commercial and strategic roles in complex multi-national organisations within highly regulated and consumer industries.

These additions to our Board and leadership team bring invaluable breadth and depth of experience. Looking ahead, we will continue to keep the composition of the Board under regular review and will add skills and expertise as necessary and where it enhances our overall capabilities.

Hand-in-hand with our ambition for Diageo to be one of the best-performing consumer products companies is our ambition to remain highly trusted and respected across everything we do.

This is why we remain strongly committed to our 'Spirit of Progress' ESG action plan. Over the past 12 months, the Board has been particularly focused on the aspects where we believe we can have the most substantial impact – positive drinking and water stewardship.

I am proud that Diageo has promoted responsible drinking since its formation in 1997. We continue that commitment today by investing in education programmes to discourage the harmful use of alcohol and encouraging moderate drinking.

This includes DRINKiQ, established in 2008, to provide people with world class information so they can make informed choices around alcohol consumption, which is now communicated on our brand packaging.

We also ensure our marketeers put their creative talents towards moderation advertising. For example, during this fiscal we launched our bold new ‘Take a Minute. Make a Plan. Never Drive Impaired’ campaign in the United States, in partnership with Mothers Against Drunk Driving, the National Football League and Uber, to tackle impaired driving. This campaign reached millions of consumers.

Our focus on water-stressed areas has continued to deliver strong water-use efficiency performance with a 2.6% improvement in the water efficiency index versus last year and a 20.6% improvement since our 2020 baseline. We continued to replenish water in our priority water basins, this year delivering over 3 million cubic metres of additional capacity, collaborating with key partners to support the communities in which we operate.

After careful review of our carbon reduction goals, we proposed new science-based targets, reflecting both the opportunities and challenges associated with reducing emissions, which were approved by the Science Based Targets initiative (SBTi). These include new interim targets for direct and value chain emissions and longer-term net zero targets. We remain committed to a science-based approach and delivering against stretching ambitions.

In the immediate term, my focus, and that of the Board, is to appoint the right Chief Executive, and support our leadership team to get Diageo back to delivering consistent growth, maximising the opportunities to strengthen the business and deliver stronger shareholder returns.

We will continue to prioritise a culture with our customers and consumers at the core, encouraging accountability, agility and adaptability.

Finally, I want to thank our employees around the world. Their energy, ideas, work ethic, passion for our brands, and commitment to our business in what has been a particularly difficult operating environment is deeply appreciated. I was delighted to hear that our employee engagement levels have remained high this year, with 90% of our employees stating they are proud to work for Diageo.

The Board and I are committed to working closely with the Executive Committee to ensure the decisions we make today position Diageo to thrive and deliver for shareholders. More resilient, more responsive, and more relevant to consumers than ever before.

Sir John Manzoni

Chair