Image Source: Party Crowd
Aug 10, 2018
New generation are taking over the helm of giant food companies. Looks like a revolution as Six of the world’s ten biggest food firms, including Nestle, Mondelez International Inc and Kellogg Co, have replaced their CEOs in the past three years.
Most recently is Top CEO Indra Nooyi gave way to Ramon Laguarta to reigniting growth at the world’s best-known food and drink PepsiCo. Six of the world’s ten biggest food firms, including Nestle, Mondelez International Inc. and Kellogg Co, have replaced their CEOs in the past three years. Campbell Soup Co and Hain Celestial are also on the hunt, with more in the broader consumer industry expected to follow.
The guess in why this revamping is taking place is that the traditional titans that dominated their sectors have lost ground to smaller brands that have done a better job selling online and connecting with millennials on social media, while facing pressure from outside investors to become more efficient.
So to counter act this and bring in newer thoughts giant companies are looking for relatively young CEOs who can crunch data like technology executives and cut costs like private equity investors. Fundamentally, this new generation of CEOs has a remit for change.
Last year Mark Schneider became the first outsider in nearly a century to take the reins at Nestle, the world’s largest food company. The 52-year-old healthcare veteran, nearly a decade younger than his predecessor, has stepped up acquisitions and divestitures and restructured parts of the business as he contends with activist shareholder Third Point.
Sean Connolly, 53, took over the helm at Conagra Brands in 2015 and has already moved the group’s headquarters, announced sweeping cost cuts, launched new products aimed at millennials and agreed to buy rival Pinnacle Foods.
Just over half of the 39 consumer packaged goods companies in the Fortune 500 have changed their CEO in the last two and a half years. Analysts are speculating whether the latest new appointment Laguarta, a 54-year-old Spaniard who speaks four languages, will be more open to strategic options like separating PepsiCo’s U.S. bottling business or breaking up the company.
Laguarta is a PepsiCo veteran with 22 years at the company, but others have looked elsewhere for new leaders.
About half of the new CEOs hired in the sector hired in the past five years have been internal candidates, down from roughly three quarters over the past 20 years, But the scenario is changing as there is growing acceptance of input from outside the industry comes as the consumer goods sector has been aggressively targeted by private equity firms and activist investors looking to shake things up.
Private equity firm 3G, known for engineering mergers and slashing costs, shocked the industry in 2015 when it combined Kraft Foods with its H.J. Heinz, keeping partner Bernardo Hees in charge. Nelson Peltz’s Trian Fund Management recently won a board seat after a proxy fight with Procter & Gamble Co.
More CEO turnover is expected as the last generation of leaders run out of room to grow using the established playbook of consolidation and focusing on emerging markets.