Diageo Considers Selling Chinese Assets Amid Declining Sales

Diageo, the world's largest spirits maker known for brands such as Guinness and Johnnie Walker, is reportedly contemplating the sale of its Chinese assets as part of a strategic review under new CEO Dave Lewis. This decision comes in response to declining sales in China, where the company has faced significant challenges, including a reported double-digit sales decline in November 2025.

The Guardian

Diageo's operations in China include a 63%-plus stake in Sichuan Swellfun, a Shanghai-listed company that distributes Baiju, a traditional Chinese spirit. However, shares in Sichuan Swellfun have decreased by 14% over the past year, resulting in a market value of approximately 19.2 billion yuan (£2 billion). The company is working with Goldman Sachs and UBS to explore potential interest from Chinese strategic buyers and private equity firms.

The Guardian

Dave Lewis, who took over as CEO on January 1, 2026, is known for his cost-cutting measures from his previous role at Unilever and his successful turnaround of Tesco. His appointment follows the tenure of Debra Crew, who faced difficulties including a profits warning due to supply issues in Latin America and a shortage of Guinness in the UK. Lewis's leadership is now focused on streamlining Diageo's portfolio, which has already seen the sale of its 65% stake in East African Breweries for $2.3 billion (£1.7 billion) to Japan’s Asahi Group.

The Guardian

Diageo's struggles are compounded by external factors such as Donald Trump's tariffs, high debt levels, and shifting consumer preferences, particularly among younger demographics who are increasingly opting for lower alcohol consumption. These trends have prompted the company to reassess its market presence and operational strategies.

The Guardian

While Diageo has not publicly commented on the potential sale of its Chinese assets, the company's ongoing review reflects a broader strategy to adapt to changing market conditions and consumer behavior.

The Guardian

Critics of Diageo's strategy argue that divesting from China could undermine the company's long-term growth potential in one of the world's largest spirits markets. Some industry analysts caution that selling off assets may not address the underlying issues affecting sales and could lead to a loss of market share.

The Guardian

There is a lack of clarity regarding the specific financial implications of the proposed asset sales, as well as the potential buyers' identities. Additionally, the extent of the impact of tariffs and consumer trends on Diageo's overall performance remains a point of contention among analysts.

The Guardian

As Diageo navigates these challenges, the outcome of its strategic review and potential asset sales will be closely monitored by industry stakeholders.

The Guardian