New CEO for Diageo
The Indian-born Ivan Menezes, 53, currently Chief Operating Officer of Diageo, is to succeed Paul Walsh as CEO of the drinks giant behind Smirnoff and Guinness at the beginning of July this year.
Mr Walsh, 58, who has headed Diageo for the past 13 years, will stay on board until June 2014, though, to help with the transition, media reported on 7 May 2013. Many observers think that Mr Walsh will be mainly responsible for completing the purchase of a 53.4 percent stake in India’s biggest drinks maker United Spirits, which began in November 2012 and has since stalled.
Several media thought it worth mentioning that Mr Menezes, who joined Diageo in 1997, is yet another business leader who stems from a developing country to lead a FTSE100 consumer goods firm, joining fellow Indian Rakesh Kapoor, who heads Durex owned Reckitt Benckiser, and Nicandro Durante, the Brazilian at the helm of tobacco giant BAT.
Interestingly, media failed to mention SABMiller, another FTSE100 company. SABMiller’s past and present CEO were both born in South Africa.
They could have also included in this list of CEOs the Brazilian-born Carlos Brito (AB-InBev), the Indian born Indra Nooyi (PepsiCo) and the Turkish-American Muhtar Kent (The Coca-Cola Company), although their respective companies are not listed on the London Stock Exchange.
Their appointment not only reflects a shift in their companies’ focus from slow growth Europe to the booming emerging markets, as media commentators have said. It is also indicative, in our view, of a shift in management style.
By placing Mr Menezes at the helm of Diageo, the company has signalled to investors that it has now set its sights fully on emerging markets in order to reduce its profit dependency on the U.S, currently standing at 40 percent of total profits. Thanks to some recent deals, Diageo says it is close to reaching its target of emerging markets’ profit contribution of 50 percent. That’s about as much AB-InBev makes in emerging markets but still way behind SABMiller, which reaps about 70 percent of its profits in these markets.
Although Mr Walsh’ tenure has widely been termed "successful", he leaves some lose ends for Mr Menezes to tie up.
Commentators say that there’s the joint venture with Bernard Arnault’s Moet Hennessey – neither side seems willing to buy the other out. And the failure to buy the Tequila brand Jose Cuervo from the Beckmann family last year leaves Diageo exposed in this drinks category. Besides, some analysts say the firm should have developed an emerging market beer business earlier on.
The tasks ahead for Mr Menezes will be to work out a new strategy for Diageo, both in terms of geographies and categories, and to retain the staff that was passed over in the leadership succession.
