A veteran of Tesco and Unilever, "Drastic Dave" intends to trim the fat and reduce the company's workforce to the bare essentials. This move appears to be more about optics than a genuine strategic imperative, given that Diageo already boasts the highest margins in its sector, neck and neck with Brown-Forman and closely followed by Pernod Ricard.

On this subject refer to Brown-Forman authorizes a first wave of share buybacks and At Pernod Ricard, cost-cutting does little to mask the decline in activity.

Above all, such ambitions resemble a partial surrender to the prospect of returning to sustainable sales growth in a market where volumes are in freefall with no sign of a rebound, and the ranks of new consumers are increasingly thin.

While Diageo, the powerhouse behind iconic brands like Guinness, Johnnie Walker, Smirnoff, and Captain Morgan, possesses an impressive portfolio, it currently lacks the options necessary to attract younger consumer cohorts with an affordable offering.

The innovations promised by Lewis in the popular RTD (ready-to-drink) canned cocktail segment have so far failed to impress observers. Is it any wonder, then, that today's news has been met with complete indifference from investors?

Accustomed to crisis management, Dave Lewis faces a significant challenge here. Coinciding with his appointment earlier this year, Diageo's board moved to slash the shareholder dividend by half: it also halted share buybacks after the stock price collapsed, having previously increased them relentlessly while the price was at its peak.

Spot the error. Indeed, it's true that over the last fifteen years, the British group has leaned heavily into the defensive nature of its business, perceived as unassailable and recession-proof, while in aggregate returning more capital to its shareholders than it generated in cash profits, or free cash flow.

Consequently, net debt has risen steadily, at a faster pace than operating profit, particularly in recent years when the latter suffered a critical contraction.

This "reset" at Diageo certainly sends a poor signal to Pernod Ricard shareholders. For its part, Pernod Ricard is showing the highest dividend yield in its history, a fact that betrays market expectations of an imminent cut to that distribution.

Last year, Diageo generated free cash flow of $2.7bn. Its current enterprise value of $51bn still represents a multiple of nineteen times this cash profit, which is now expected, or rather hoped, to be directed toward an emergency recovery.

See also on this subject Pernod Ricard's valuation still far from "maximum pessimism".