Diageo (LSE:DGE) shares have taken quite a big tumble over the last few years, driven by a combination of managerial mistakes and tougher market conditions. But that might be all about to change.

With a new CEO taking over at the start of 2026, turnaround specialist Dave Lewis is now 110 days into his tenure. So if someone had invested £5,000 into the beverage giant on his arrival, how much money would they have today?

Calculating the return so far

Across roughly the first two months of 2026, Diageo shares were on a roll. Strengthening sentiment surrounding Lewis’ impressive track record translated into a 16.6% increase in the stock price, turning an initial £5,000 into £5,830.

Sadly, this recovery momentum didn’t last. The company released its results for the six months ending in December, which was a stark reminder of the challenging situation Diageo is in. And with Lewis not providing a more detailed breakdown of his turnaround plan, shares once again started to tumble.

Consequently, a £5,000 initial investment is now worth closer to £4,595 today.

However, it’s still very much the early days of Diageo’s turnaround. And despite what the current share price performance suggests, Lewis has been busy making some bold moves.

The progress so far

Step one of any business turnaround strategy is to start fixing cash flow leaks. This typically means cutting costs. And on that front, Diageo’s already begun delivering results.

The firms $625m annualised savings programme is already on track to deliver half of its target by June. Operating margins have also seen a modest bump, while dividends have been effectively slashed in half.

Seeing a payout cut is never fun. But the move freed up roughly $1bn of annualised free cash flow, helping to accelerate debt reduction efforts. At the same time, ongoing portfolio optimisation efforts have seen several non-core assets flagged for potential divestment, reconcentrating focus on the best parts of the business.

What comes next?

The next critical milestone is the May trading update. Beyond being the first set of results that reveals the firm’s performance since Lewis took over, the CEO is also expected to unveil far more details about his turnaround strategy.

But beyond repairing the balance sheet, analysts are specifically looking out for signs of volume recovery in the US and Chinese markets.

Combined, North America and the Asia Pacific regions make up 59.9% of Diageo’s operating profits. Yet weaker consumer spending has been dragging down organic growth while inflation drives up costs, resulting in the bottom line moving in the wrong direction.

So where does that leave investors today?

What’s the verdict?

Right now, Diageo’s firmly within the discovery and acknowledgement phase of its turnaround. Based on the moves made so far, it seems like 2026 will be a reset year, with a lot of changes to pricing, volumes, branding, and corporate structure. In my opinion, 2027’s likely going to be the year when investors will find out whether or not Lewis’ strategy is working.

So for those considering adding Diageo shares to their portfolios today, it’s important to recognise that even if the turnaround is a success, it’ll be a multi-year journey. But for patient investors comfortable with some short-term volatility, Diageo could be a stock worth mulling.