High profile executive changes took the headlines at the end of last year and 2003 will be marked by further top level appointments. Ben Cooper asks whether the identities of the new arrivals will indicate a new direction for the industry.
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We bring in the New Year with the call of “Out with the old and in with the new” and it appears that major drinks companies, both in the alcoholic and soft drinks sectors, are taking this most literally. The last month saw a flurry of high-level executive appointments at major companies.
The boardroom activity begs some interesting questions. Are the changes in any way connected? What are the implications, if any, for the wider industry? And, can we expect more in the coming months?
The idea that these changes are suggestive of major changes afoot in the industry is an interesting one. But it would appear that the rather more prosaic explanation of coincidence is the more likely reason for so many changes happening at once. Generalisations are always problematic and the companies concerned seem to have differing reasons for the changes they have made.
For instance, there had been speculation that Hugo Powell was to step down as chief executive of the global brewing force, Interbrew, and duly in December the company announced the appointment of John Brock, chief operating officer of the soft drinks and confectionery group, Cadbury Schweppes, as its new CEO.
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By GlobalDataMeanwhile, at Coca-Cola the post of chief operating officer had been filled by Brian Dyson on a temporary basis since the departure of Jack Stahl in March 2001. Steven Heyer, chief of Coca-Cola’s Latin American operations, had been the favourite among analysts to get the job and so it was not a huge surprise when Coca-Cola named him as its new COO last month.
At the same time, the UK cider group, Bulmer, named Miles Templeman as its new CEO. Templeman, formerly head of the Whitbread Beer Company and a well-respected and experienced figure in the industry, has been charged with the task of leading Bulmer out of adversity.
So, the conspiracy theorists among us would have to concede that these changes, all of which occurred within the same week, were all made for different reasons.
However, while the personnel changes are not linked, they do at least have one thing in common. They are all external rather than internal appointments. Stephen Heyer only joined Coca-Cola last year and given that company’s hitherto strict policy of promoting long-serving executives to senior positions, his appointment could certainly be seen as external.
Indeed, it could be argued that if Coca-Cola is making external appointments, something in the industry is definitely changing. While Bulmer certainly had no choice other than to appoint externally, the other companies have made a clear choice of going outside their ranks to find new leaders. And this, informed observers believe, is a trend which is likely to continue as companies seek both the broad skills and knowledge base required to run a major corporation or, in certain cases, specific experience required to take that company in a new direction.
In the case of Bulmer and Interbrew, both Templeman and Brock are seen more as specialists in growing companies organically, rather than through mergers or acquisitions. It is no surprise after the sobering experience of the last year that Bulmer should be looking for organic consolidation at this time. But it is interesting to note that Interbrew’s choice of CEO to some analysts implies that a period of consolidation is on the horizon.
While drawing inferences about wider trends from a series of unconnected appointments may be problematic, if a number of companies were to make what could be seen as similarly motivated appointments, a period of consolidation and a slowing-up in merger and acquisition activity could quite reasonably be predicted.
And we may not have to wait that long for further high-ranking appointments. Three major drinks corporations could announce changes at the top within the next year or so. Brian Stewart and Ted Kunkel, CEOs at Scottish & Newcastle and Foster’s Group respectively, are both nearing retirement, while Bacardi is actively looking for a new CEO as it seeks split the roles of chairman and CEO.
S&N has said that it will announce a successor to Brian Stewart in early-2003. Some analysts are hoping that this will signal a culture change at S&N though at this stage it appears more likely Stewart’s successor will be chosen with continuity rather than change in mind. “There still remains a danger that the candidate will not change the culture within S&N too much – this is not what’s needed, in our view,” said WestLB Panmure analyst, Stuart Price, in a note. “It is certainly true that management has come a long way since 2000 and its first entry into foreign brewing, but there remains much to be done if the group is to add real shareholder value.”
Given the speculation that Bacardi is considering undertaking an IPO in a bid to raise the necessary capital for a significant acquisition or merger, the choice it makes for its new CEO will be keenly watched. If the successful candidate is more like Brock and Templeman, the possibility of a further transformation for Bacardi might well be said to have receded. However, if the company appoints someone with strong M&A experience or even with an equity finance background, then speculation will mount that Bacardi is serious about doing the big deal which many observers believe it needs.
