The decision aims to bolster the balance sheet of the FTSE 100 giant, which owns Guinness, Smirnoff, and Johnnie Walker, following a period of sustained pressure on margins and a 19.8% year-on-year decline in stock value.

The beverage firm reported a 4% drop in sales to $10.5 billion for the six months ending December 2025, a steeper decline than analysts had anticipated. Operating profits also dipped 1.2% to $3.1 billion, hampered by high tariffs and a shift in consumer habits toward cheaper brands and low-alcohol alternatives. While sales showed signs of recovery in Latin America and grew by 4.9% in Europe, these gains were overshadowed by significant slumps in North America and China, which fell by 7.4% and 13% respectively.

Sir Dave Lewis, who replaced Debra Crew in January, defended the dividend cut as a necessary step to create the financial flexibility required for a long-term turnaround. Despite a recent US Supreme Court ruling against certain tariffs, the company remains cautious about the geopolitical landscape and ongoing macroeconomic uncertainty. Analysts suggest that while the reduction in payouts may alienate some investors, it signals a prioritisation of debt reduction and leaner operations under the new leadership.