Diageo is reportedly reviewing strategic options for its Chinese operations, including a potential sale, as the world’s largest spirits group continues to reshape its portfolio amid mounting financial and market pressures. According to Bloomberg News, the London-listed company has mandated Goldman Sachs and UBS to explore alternatives for its assets in China, where performance has weakened markedly.
At the centre of the review is Diageo’s more than 63% stake in Sichuan Swellfun, the Shanghai-listed producer and distributor of Chinese baijiu, including the Shuijingfang brand. Market sources cited by Bloomberg indicate that banks have already sounded out interest among Chinese strategic investors and private equity groups. Sichuan Swellfun currently has a market capitalisation of around USD 2.7 billion, implying a value of roughly USD 1.7 billion for Diageo’s holding. Shares in the company declined by about 14% over the past year, reflecting softer demand and broader market headwinds.
The potential disposal comes as Diageo grapples with several challenges simultaneously. In November, the group flagged a double-digit sales decline in China, underlining the difficulty of maintaining growth in the market. At the same time, Diageo faces elevated debt levels and a more cautious global consumer environment, with younger drinkers increasingly moderating alcohol consumption. In the US market, the outlook has been further complicated amid trade uncertainty linked to the Trump administration’s tariff policy.
The China review follows a series of divestments aimed at sharpening the group’s focus and strengthening its balance sheet. In December, Diageo agreed to sell its 65% stake in East African Breweries to Asahi Group for USD 2.3 billion, marking its exit from direct beer operations in Africa (inside.beer, 18.12.2025). Industry observers also expect further disposals, including non-core assets outside spirits, as part of a broader clean-up.
The strategic reset is being driven by new leadership. Dave Lewis, who took over as chief executive on 1 January, is widely known for decisive portfolio streamlining from his time at Unilever and Tesco. Analysts see the possible exit from China as consistent with a more disciplined capital allocation approach, prioritising returns over sheer geographic presence.
Diageo declined to comment on the reports.
