Heir-in-waiting?
On a recent visit to Frankfurt, Alan Clark, Managing Director SABMiller Europe, proved that in the SABMiller succession race he is going to be one of the front runners.
Where there is smoke there is fire. In case you wondered why there has been a spade of articles recently, which openly speculated about Graham Mackay’s retirement, while, of course, refuting any claims that it is going to happen soon – well, so did we. To our knowledge, Graham Mackay, SABMiller’s tough-talking Chief Executive, who is 58 years old, has not announced any plans yet that he is going to step down. Health, luck and other factors permitting, he will strive to keep his office until he’s 65 in order not to be outdone by August Busch III who went on and on and on … until they probably forced him to say: “I’ll be retired by 65. At that point, this is a younger person’s game.”
Times are a-changing. Perhaps the brewing industry has already turned into a younger person’s game. Judging from evidence, if you want to get into the driver’s seat you cannot afford to be far gone on the wrong side of 40.
In any case, where there is smoke there is fire. SABMiller would not be SABMiller if it did not have a succession planning strategy in place already. One name that is mentioned frequently by those armchair strategists, who claim to know SABMiller “really well”, is Alan Clark’s.
Should SABMiller’s directors, one day, decide to recruit a successor from within, they will find it difficult to ignore Alan Clark. The South African Dr Clark, who has a doctorate in psychology and has practised as a clinical psychologist, has held several strategic and operative posts with SABMiller. And, like Graham Mackay, he is not just a figure-crunching business person but someone with a background in the Arts, that makes him stick out from the crowd of suits.
Since joining the company in 1990 as Training and Development Manager, he has held a number of senior positions in the group, including Marketing Director of SAB, Managing Director of Amalgamated Beverage Industries (SAB’s soft drinks arm in South Africa) and Chairman of Appletiser South Africa. Knowing both the beer and the soft drinks markets well, he became Managing Director of SABMiller Europe in 2003, a market area which stretches from Manchester to Vladivostok. This huge region is far from homogeneous. Mr Clark has got to squeeze profits out of mature markets like the United Kingdom and Hungary while chivvying on beer consumption in markets like Russia and Slovakia.
Although his market region is not the biggest in terms of profits (South Africa at 31 percent of group EBITA and Latin America at 26 percent are more profitable), it still contributes 20 percent to SABMiller’s group profits and 15 percent to its beer volumes.
Now do you think it a coincidence that Alan Clark, 47, was sent on a roadshow to meet the press in Germany at the beginning of September?
Either Graham Mackay was terribly busy that day clinching another major deal or this roadshow should never have happened. As far as corporate etiquette is concerned, there is only one person to talk to the press and that is the CEO. Him or no one. End of discussion. Admittedly, even SABMiller occasionally bends its own rules. Corporate PR, some time back, must have decided that it would do Miller’s image in the U.S. plenty of good if the gregarious Norman Adami were to lend the struggling U.S. brewer his face. So they arranged a great piece of hagiography with one of the quality magazines. Did it do the trick? Let’s say it did not do SABMiller’s share price any harm.
But this, repeat, this was an exception. If anyone does any talking to the public or to the press it is – and ought to be - Graham Mackay.
So why was Alan Clark sent on a roadshow to meet the press? Why should he answer questions about the German market – a market, which is far from central to SABMiller’s bottom line – if the reasons for his coming here were not altogether ulterior? At SABMiller, they may call Germany a “focus export market”. Yet, that entails only two hundred thousand hectolitres of imported Pilsner Urquell.
To date, SABMiller has not bought into the German market. The beer its 50 employees sell here is brewed in the neighbouring Czech Republic. When asked why SABMiller has not forged any closer ties with a German brewer yet, Alan Clark replied by giving a succinct description of Germany’s beer market: too fragmented, too little profits for everybody, too regionalised and too dominated by discounters.
That answer did away with the suspicion that Mr Clark was over in Germany to prepare the media for a deal that was still in the offing. Of course, it is not unheard of businessmen to lie into your face one day and next day sign a deal with your neighbour. But ask yourselves: why should SABMiller feel the need to engage in such a complicated media strategy?
Mr Clark would not rule out that one day SABMiller could have a brewing presence in Germany. After all, it cuts into your profits if every second glass bottle does not find its way back to the brewery (the perils of Germany’s returnable bottle system). However, for the moment, it was enough for SABMiller to grow the presence of Pilsner Urquell in Germany’s premium on-premise outlets. Perhaps they might even do the same with Miller Genuine Draft, Nastro Azzurro, Lech and Tyskie, he said. Polish beer brands do very well in the United Kingdom this year thanks to the large number of Polish immigrants so they might try to repeat that feat in Germany too. Nevertheless, for the foreseeable future, Mr Clark insisted, SABMiller will not be a large player in Germany, selling perhaps one million hl of beer in three years’ time.
Mr Clark was outspoken on other corporate goals too: that SABMiller always strives to be the number one or number two player in each market it operates in; that its focus is on the mainstream and premium segment, although recently his people have begun to look at economy brands too which in some markets constitute more than 30 percent of total beer consumption; and that management control of the company is central to SABMiller because they promise to add value to their shareholders.
After the roadshow the German media reported that SABMiller was going to push further into the German market. Yeah, that was one of the messages Mr Clark was trying to get across. But what was his real message? That German brewers ought to feel concerned? Or that analysts, investors, the business community the world over should take note of someone willing to take on greater powers in one of the world’s biggest brewing companies?
We shall find out eventually.
