Diageo promotes from the inside as chief steps down

Mr Menezes, currently chief operating officer, will take up the role on July 1.

Mr Walsh, 57, will remain with Diageo for a year to hand over to Mr Menezes before he retires.

Mr Walsh has been in charge of the FTSE 100 drinks giant, whose brands include Guinness, Smirnoff and Johnnie Walker, since 2000.

Analysts said the appointment of an insider at the world’s biggest spirits firm suggests there will be no significant change in strategy.

Diageo’s share value has tripled under Mr Walsh’s reign, but the company has found it tough to make acquisitions in emerging markets.

Mr Menezes has a background in both India and the US, and this may help to underline the group’s global credentials. Analysts had been expecting the move after Mr Menezes, formerly the head of Diageo North America, was made chief operating officer last year.

Jefferies analyst Dirk Van Vlaanderen said: “We would not expect any significant change to strategy and see this as the natural ‘next step’ in Diageo leadership. Ivan is a known quantity and has done a good job managing Diageo’s largest and most profitable business segment.”

Amid weak demand in recession-hit Europe, Diageo has bought brands in emerging markets, where it aims to make around half of its turnover by 2015.

In November, it agreed to buy a controlling 53.4 per cent stake in India’s biggest liquor maker United Spirits under a two-stage process. The completion of the acquisition is yet to happen, slowed down by regulatory approvals, while the second-stage open offer is unlikely to succeed and Diageo is expected to end up with around 30 per cent of the firm.

In December, long-running talks to buy a stake in tequila brand Jose Cuervo collapsed.

Last month Diageo reported sales growth of five per cent for the nine months to end-March. A four per cent decline in Western Europe dragged on growth elsewhere.

Diageo’s chairman Franz Humer said: “The handover is being made at a time when the business is strong and Ivan takes on the role of CEO at an exciting stage of the company’s global development.”

Diageo said that Mr Walsh has not yet decided what his next move will be. He holds a number of non-executive positions, as well as roles in the Government’s business and energy departments.

Under Mr Walsh, the company has pursued a strategy of buying drinks brands in Turkey, Brazil, China and Africa, while selling off non-drink businesses such as Burger King.

Mr Walsh began his career with Grand Metropolitan in 1982.

The drinks company merged with Guinness in 1997 to create Diageo.