The new boss of Diageo has slashed its dividend as the Guinness maker predicts a further spiral in sales.

It is the first update from Dave Lewis at the helm of the FTSE 100 firm, which also owns whisky brand Johnnie Walker and Smirnoff vodka.

The former Tesco boss - who was nicknamed Drastic Dave after his cost-cutting at the supermarket - stepped into the job in January after the dramatic exit of his predecessor Debra Crew last year.

He has been tasked with a tough turnaround mission as the drinks giant battles to reverse a slump in demand as more drinkers opt to cut down or abandon alcohol.

But in his seventh week in the job, Lewis said he expects sales to fall 2-3 per cent in the 2026 financial year - blaming a weak consumer in the US.

The group announced an interim dividend of 20 US cents, down from 40.5 US cents a year earlier. It said it is committed to growing shareholder distributions, with a minimum floor set for the dividend of 50 US cents each year

Lewis said: ‘We are confident that this is the right action which will ensure that Diageo can reinforce its position as the leading international spirits business and drive stronger shareholder value over the coming years.’

The group saw sales for the six months to December 31 fall 4 per cent to £7.7bn.

It said demand for its drinks in the US was hit by ‘pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet.’

Lewis said there was ‘significant work ahead’ to turn the business around.

He said he can ‘already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering leading to higher growth.’

He said his turnaround would focus on ‘customer, customer, customer’ and initial analysis has shown that ‘a very significant squeeze on disposable income.’ 

Shares have soared 13pc so far this year - but they are still down by around 38pc over the past five years.

Diageo warned of weaker demand from consumers in China and the US at a trading update in November. It said sales slid 2pc to £3.75bn between July and September compared to the same period in 2024.