Diageo shares slipped on Tuesday after the global drinks giant announced CEO Sir Ivan Menezes will step down and replaced by Debra Crew.
Sir Ivan Menezes has been in charge of Diageo since July 2013 and shareholder disappointment on Tuesday is understandable.
During his tenure, the Diageo share price has nearly doubled and is firmly established as one of the world’s largest alcohol companies by market cap.
“A change at the top is always a leap into the unknown, although slightly less so when the incumbent is already part of the team. Diageo is the sixth largest company on the FTSE 100, and the new captain is unlikely to be given much of a honeymoon period by shareholders,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.
“Sir Ivan will be a tough act to follow. Diageo now sells over 200 drinks brands across 180 markets, and is a category leader in many of its spirits categories. And on a fitting note for his departure, its flagship Guinness brand has become the number one beer sold in pubs in the UK.”
“Growth is expected to slow in the short-term however, and an earnings multiple of about 20x means Debra Crew will be under extra pressure to perform.”
Diageo shares are down 2.7% year-to-date and has a 2.1% yield.