FTSE 100 drops sharply — are serious bargains emerging in UK stocks?

The FTSE 100 has slumped nearly 8% since the Iran conflict began, dropping from 10,900 to around 10,100. While headlines focus on geopolitical doom, some investors are spotting what could be a rare, once-in-a-decade chance to pick up high-quality UK stocks at compelling prices.

Panicking markets

When panic hits the market like it has over the last week, I always remember Warren Buffett’s advice: be greedy when others are fearful.

Diageo (LSE: DGE) is sitting at levels not seen since the early 2010s, yet a new CEO, a cost-cutting programme, and a refreshed strategy suggest this fallen giant may be quietly setting the stage for a turnaround.

Structural opportunity

Over the past few years, the biggest drag on sales has been the cost-of-living squeeze. Consumers are shifting behaviours, favouring zebra-striping, lower-proof drinks, and non-alcoholic alternatives.

Beers and spirits still drive more than 95% of the company’s sales — a remarkably stable market. Volumes have grown steadily over the past decade, and the shift toward premium brands has been relentless. Diageo has captured this demand with Johnnie Walker, Buchanan’s, and Guinness.

Even under economic pressure, consumption frequency remains steady, and smaller pack sizes are creating new occasions rather than reducing demand.

The US (the company’s largest market) shows both a challenge and an opportunity. Diageo’s premium portfolio is concentrated in higher price points, leaving it underrepresented in the growing mass-market segment.

The new CEO is zeroing in on ready-to-drink (RTD) offerings, currently just 10% of Diageo’s share. With the segment booming, expanding here could meaningfully lift revenue.

Turning the beast around

Diageo is a giant, and giants don’t move easily.

The new CEO isn’t shy about shaking things up. He’s overhauling the global operating framework, streamlining innovation, and revamping customer engagement — all aimed at running a leaner, faster, more focused business. Every dollar of capital is being pushed into high-growth areas like RTDs and premium spirits.

Cost efficiencies are coming from every corner: supply chains, marketing, and back-office operations. The goal is simple — keep the premium portfolio strong, but extract more value from the entire machine.

But make no mistake, execution won’t be easy. With a sprawling, complex structure and a culture that hasn’t always rewarded speed, turning Diageo into a sharper, nimbler business is a tall order. Missteps in restructuring or misjudging where to invest could slow progress — or even stall it.

For investors, that tension is part of the story: a clear plan to unlock value, but one that carries real execution risk.

What’s the verdict?

Diageo is a powerhouse with a premium portfolio and global reach. The CEO’s plan to tighten portfolio focus, sharpen customer relationships, and redesign the operating model gives a clear roadmap to unlock value.

Economic pressures are challenging, but the broader spirits and beer market remains steady, and the company’s scale, brand strength, and disciplined capital approach create real optionality. The dividend reset gives flexibility to invest in growth without selling core assets cheaply.

Investor sentiment is at a low, with many throwing in the towel. That’s why I recently bought shares. Market pain is at its peak, and with Diageo’s structural strengths and clear strategy, it feels like the right time to step in. But it’s not the only opportunity I’m tracking right now.

The post FTSE 100 drops sharply — are serious bargains emerging in UK stocks? appeared first on The Motley Fool UK.

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Andrew Mackie owns shares in Diageo. The Motley Fool UK has recommended Diageo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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