Diageo’s CEO has asserted the company has “an opportunity to get much more for less” from its advertising and promotional investment, as it seeks to be more “disciplined” in how it spends its budget.

The drinks company, which owns brands including Johnnie Walker, Guinness and Baileys, reported results for its first quarter ended 30 September 2025 today (6 November).

Diageo has been facing a challenging consumer environment, something that was reflected in today’s results, in which the company reported a year-on-year sales decline of 2.2%  in the quarter. Net sales were $4.88bn in the period.

As the spirits market generally faces a tough environment and Diageo looks to drive future growth, it has embarked on a cost savings programme, of which advertising and promotional spend is a key focus.

“From a dollar spent perspective, we continue to have an opportunity to get much more for less,” CEO Nik Jhangiani told investors, speaking about the business’s advertising spend.

Inside Diageo’s ‘living and breathing’ marketing effectiveness culture

Effectiveness has long been a central tenet of marketing at Diageo. For example the business has invested in bespoke analytics tools including Catalyst, designed to step up its efficiency capabilities.

The business now feels it can go even further in squeezing more out of its marketing dollars as part of its “accelerate” programme, in particular its focus is on what it calls “development spend”. This is the portion of advertising and promotional investment that is spent in developing creative.

The GB market was cited as one of Diageo’s global markets that is successfully driving efficiencies, having cut its development spend in half. Diageo’s GB marketing team has also cut the number of agencies it works with by 30%, the company’s interim CFO Deirdre Mahlan noted.

AI was highlighted as an enabler of this reduction in development spend. In particular, how the technology allows the business to organise data to drive better analytics. The company is also leaning on its existing tools, such as Catalyst, to get more out of its marketing spend.

We’re not going to be shy if there is a reason to pause in a certain area and come back when we see that growth coming back.

Nik Jhangiani, Diageo

Another element highlighted by the business’s leadership was how it makes decisions, with Jhangiani keen to drive a “one Diageo way” of brand building, meaning that choices would no longer be made in market or regional silos.

Jhangiani also emphasised that the business would take a more holistic view of its marketing effectiveness, rather than just looking at its share of voice.

“I think for a while, we’ve been focused on one element of that spend, which is just the media spend, as opposed to through the line,” he said.

Investing in point-of-scale activations was one example he gave as an area where there is potential for Diageo to increase effectiveness. The Australian business has successfully stepped up its focus on driving effectiveness in its commercial A&P (advertising and promotional) spend, he noted, adding that the aim will be for other global markets to emulate this.

Making choices

As well as ensuring its advertising budget is working as hard as possible, Diageo is also looking at the choices in makes and choosing not to invest in some areas.

Speaking in September, Jhangiani asserted that Diageo had got itself into something of a “vicious cycle” when it came to marketing spend, where it felt like it needed to spend to drive growth, without necessarily knowing that where it was investing was driving growth.

Today, he re-asserted his commitment to being choiceful with advertising spend.

“We’re not going to be shy if there is a reason to pause in a certain area and come back when we see that growth coming back,” Jhangiani said.

Diageo CEO admits it got into a ‘vicious cycle’ on marketing investment

Returning to the theme of “commercial A&P” spend, Jhangiani noted that in Australia some of its retailer support investment had not been generating returns for Diageo, and in some cases not even generating returns for its customers.

“Is that the best and prioritised use of our cash, or is there better way to reallocate some of that spend and drop some of those savings to the bottom line, but still be able to support what we might need from a customer activation perspective,” he said.

Despite the talk of cutting advertising and promotional spend, Diageo’s interim CEO and CFO were keen to emphasise their commitment to investing in brand building.

Jhangiani asserted that he was focused on both the “short- and long-term returns” of the company’s advertising spend and recognised the importance of investing behind brands.

“We are a branded consumer goods company, we see the level of spend that we need to have to continue building and protecting brand equity as critically important,” he said.