The maker of Johnnie Walker whisky, Smirnoff vodka, and Guinness beer not only posted worse-than-expected half-year results this morning, but once again lowered its annual outlook and halved its dividend—a cocktail of bad news that sent its shares tumbling more than 14% on the London Stock Exchange.

Beyond these lackluster results, which analysts had largely anticipated, market participants appear most concerned by the prospect of price cuts at the British group under its new CEO, Sir Dave Lewis, who comes from the retail sector after six years at the helm of Tesco, the UK's largest supermarket chain.

In the statement released this morning, Diageo's CEO outlined three immediate priorities: (1) deploying segment-based growth strategies and regaining ground with core brands, (2) focusing on "the customer, the customer, the customer," and (3) overhauling the company's operating model to achieve sustainable profitability.

Amid the specter of a potential price war in the sector, Pernod Ricard dropped 8.4%, marking by far the steepest decline on the CAC 40, while Rémy Cointreau slid 8.2% and Campari fell 6.5% in Milan.

Last week, Pernod Ricard had already reported quarterly results that fell short of market expectations, with a 5% organic decline in sales, though analysts had chosen to focus on the French group's efforts to improve cash flow.

"But in this environment marked by weak activity, management has no choice but to focus on cost discipline, accelerating cash generation, and strengthening the balance sheet," Berenberg's team noted yesterday.

"Given that the stock has now fallen more than 60% from its April 2023 highs and is trading at multi-year valuation lows, one could argue that the share price now reflects much of the market's negativity," the research firm added, maintaining its buy recommendation on the stock.