Diageo (LSE:DGE) shares have started to recover from an almighty hangover. But there’s an important date investors need to mark in their diaries. 

The company is set to release its results for the full (financial) year on 6 August. The more interesting thing, though, is a strategy update.

What’s been going on?

I’m a Diageo shareholder. I haven’t actually owned the stock that long in the grand scheme of things, but it feels like it’s been forever. 

It’s just been one thing after another. We’ve had tariffs, weak consumer spending, and preferences shifting away from alcohol.

To try and get things back on track, Sir Dave Lewis has been appointed CEO. And the early signs have been promising. There are plans to sell off some peripheral assets to focus on core brands. The dividend has also been lowered.

This is a good start. But the firm hasn’t recruited ‘Drastic Dave’ just to divest a stake in an IPL cricket franchise.

The obvious moves have been made – and there’s nothing wrong with that. But investors want to know what the plan is going forward.

What’s coming next?

It’s a little hard to know exactly what Diageo can do. Some of the challenges it’s been facing are beyond its control. 

In the US, consumer sentiment is at its lowest levels in five years. And that’s an ongoing challenge in one of the company’s key markets.

Source: Trading Economics

Weak consumer sentiment might seem like a reason for a drink. But that’s not how they see it across the Atlantic and that’s why sales are still weak.

There’s not much Diageo can do about inflation or higher mortgage rates. What it can do, however, is focus on being as competitive as possible.

Importantly, it’s not that Diageo’s competitive position is weakening. The firm’s premium spirits aren’t losing much ground.

The trouble is that the market for those drinks is contracting. And Drastic Dave’s job is to figure out how to keep the company moving forward in this environment.

Ready to drink?

Investors are expecting ready-to-drink (RTD) products to be a big part of the company’s strategy. And this makes a lot of sense. 

If consumers are watching their finances, offering them something affordable is key. But while Diageo has been slow off the mark, it has a chance to catch up.

Switching costs in this industry are low. That means there’s always scope for new entrants to win market share from established leaders.

Ordinarily, that’s a risk for Diageo’s market-leading brands. But it’s in the unusual situation of being behind in the RTD market.

That might mean that being fashionably late to this particular cocktail party isn’t the end of the world. And it’s initiatives like this that I’ll be watching for on 6 August. 

Beyond the numbers

When Diageo releases its end-of-year results, I’ll be paying close attention. But it won’t just be the numbers I’ll be looking at. 

We’ve already had three quarters of updates, so most of the data for the year is already in. The big question is what’s coming next.  

Drastic Dave hasn’t wasted time getting to work and that’s a very good thing. But it’s now time for the more difficult bit to get started.