When President Trump began his second term, he turned to Elon Musk and the DOGE committee to cut costs. It turns out cutting costs in government is generally much harder than it is in the private sector. The reason being government is expected to do some things, in private business if a company wants to end a business line, they can and do. When companies do not make enough profits, they bring in a cost cutter as the CEO.

In an article from Reuters, Diageo new CEO Dave Lewis unveiled a $1 billion cost cutting plan, saying the world’s top spirits maker must adapt to a prolonged period of weak growth.

Diageo controls liquor brands such as Johnie Walker whiskey, Guinness beer, Smirnoff vodka, Captain Morgan rum. Baileys Irish creq liqueur and a host of others.

Mr. Lewis is nicknamed Drastic Dave for his history of cost cutting at Tesco and Unilever.

The cost cutting is expected to take 3 years and includes and cutting back on capacity for growth than never materialized. The North American spirits market is expected to decline next year, stabilize in 2 years and growth thereafter.

Linking to dividend paying stocks, if a company is not growing then it needs to cut costs. Investors want to invest in companies than can and do grow, otherwise the stock trades at a lower multiple. The company can still make money, it is just not making as much, which leads to investors asking are their better alternatives? Do you want to exit or cut a position, put the company on your watchlist and wait for a couple of years to raise your holdings? Only time will tell if that is a good idea, but it is always worth asking.

There are more questions than answers, till the next time – to raising questions.