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Earlier today, I was reviewing the FTSE 100 index to discover the shares that had jumped or slumped in 2025. To my regret, I discovered that my family portfolio owned the Footsie’s two worst performers in this category. One stock we bought after its price collapsed in April — a ‘fallen angel’ business I hope to be a recovery play. The other loss was caused by the Diageo (LSE: DGE) share price crashing this year.
Dreadful Diageo
At their 2025 high, Diageo shares hit 2,567.5p on 9 January. Alas, the share price has fallen steeply ever since. On 10 December, it hit a 2025 low of 1,587p, before rebounding slightly. From top to bottom, that’s a collapse of 38.2%.
As I write, Diageo stock trades at 1,608p, valuing this global drinks manufacturer at £35.6bn. On 31 December 2001, the shares closed at 4,036p. Thus, they have crashed by 60.2% from their post-Covid-19 high. Yikes.
Furthermore, the Diageo share price is down 35.6% over one year and a whopping 44.9% over five years. In contrast, the FTSE 100 is up 52% in the last half-decade, leaving Diageo shares looking dreadful.
Delicious dividends
However, the slumping share price has driven Diageo’s dividend yield much higher. Right now, this stock offers a dividend yield of 4.9% a year — a level I don’t recall seeing in many decades of following this share.
Even adding dividends to the above returns leaves Diageo shareholders nursing heavy losses. Yet as I often remind myself, buying shares gives me a stake in a company’s future, not its past. But would buying more of this bombed-out FTSE 100 share really be a wise move for me?
What I will say is that I don’t think the worst is over for this giant British business quite yet. One problem is that UK alcohol consumption this year fell to its lowest level since one survey began in 1990. Indeed, this year’s booze sales are more than a quarter lower than in 2005. This is largely down to moderation among older drinkers, rather than growing teetotalism (sobriety).
Of course, nights out with friends are way more expensive these days. For young adults, boozing competes with social media, video games, and legal (and illicit) cannabis for entertainment and ‘fun’ spending. All of these trends are negative for Diageo and the like.
2026 turnaround?
Another issue is that the group has appointed a new CEO, Sir Dave Lewis, who starts work on 1 January. Renowned as a turnaround expert, Sir Dave will no doubt ‘kitchen sink’ the group’s next set of results. In other words, I expect lots of write downs and doom and gloom in the half-year results due on 25 February 2026.
Finally, one thing that nearly 40 years of investing has taught me is to pull up the weeds in my portfolio, rather than leave them be. But as I suspect the Diageo share price will fare much better in 2026 than this year, I’ve decided to hold onto our stake for recovery. However, any more nasty news and I may have to take a hefty loss by selling out!
