Diageo sells Kenyan business to Japan's Asahi in £2.3bn deal to cut debt

Diageo has agreed to sell its Kenyan business to Japanese brewer Asahi in a £2.3 billion deal as the London-listed drinks group steps up efforts to cut debt amid weakening global demand for alcohol. The company will offload its 65 percent stake in East African Breweries, the dominant player in Kenya’s drinks market, as it continues to dispose of non-strategic, non-core assets, interim chief executive Nik Jhangiani said.

The transaction follows a string of Africa-focused divestments, including the sale of Diageo’s Ethiopian and Cameroonian operations in 2022, Nigeria in 2024, and Ghana this year. Diageo will retain farming operations for certain premium spirits in Africa, the company said, while concentrating on core brands such as Johnnie Walker, Baileys and Tanqueray gin.

The deal is part of a broader effort to reduce leverage, with interim chief executive Nik Jhangiani noting that the transaction with Asahi is expected to reduce Diageo’s debt. The company has repeatedly weighed the balance between asset disposals and maintaining a footprint in key markets as it navigates a challenging pricing environment and softer demand in some regions.

Leadership changes ahead are also in focus. Former Tesco boss Dave Lewis is set to join as chief executive in January. Known as Drastic Dave for his ability to turn around underperforming businesses, Lewis will face a market backdrop of historically low industry valuations amid falling demand among younger consumers and US tariffs on imports, according to the surrounding coverage of the deal. The Kenyan sale underscores Diageo’s strategy to streamline its portfolio and focus capital on high-return brands while trimming debt.

In the near term, Diageo will exit non-core operations in Africa while preserving farm relationships tied to premium spirits, allowing for supply continuity of brands like Johnnie Walker, Baileys and Tanqueray as the group looks to maintain momentum in brands that drive the majority of its profitability. Analysts have noted that the sale aligns with Diageo’s ongoing push to rebalance its asset base toward core brands and regions with stronger growth potential, even as it navigates a softer global backdrop for alcohol consumption.