Staff shake-ups and stock market listings set to ripple through drinks trade

Fibo Quantum

Two significant moves at the very top of the global liquor league suggest big change is afoot.

Diageo, the biggest producer of premium beverage alcohol brands, has appointed a new Chief Operating Officer in a clear signal that it is planning for succession in the boardroom.

Meanwhile, Kweichow Moutai, the baijui producer valued at more than three times Diageo’s market capitalisation, has paved the way for a further stock market listing, opening the possibility of wider share distribution and the opportunity for more international investors to take a stake in China’s largest “non-tech” company.

At Diageo, the appointment of Debra Crew as COO follows the pattern set when Ivan Menezes took that role in advance of taking over the driving seat from Paul Walsh in 2013. It seems that the role is  reserved as a final proving ground for the prime candidate for the top spot and has been vacant since Menezes moved up.

Before that Walsh had been promoted to the COO role from running the company’s then Pillsbury US bakery arm.

Like Crew, Menezes had successfully headed up Diageo’s North American division before being elevated to the role of heir apparent.

Crew became Diageo’s North American and global supply president two years ago at the height of coronavirus lockdowns.  Previously she had been a non-executive director.

Although she is not being elevated back onto the board, analysts believe Crew will step up to the top job whenever the 63-year-old  Menezes retires. Last November he set out his strategy for the next three years and ambitious targets for Diageo through to 2030.

Most observers expect Menezes to retire next year, or possibly early in 2024, although a source close to the company told The Times that he remained “very energised and focused on the business” and that no decision had yet been made on the succession.

In announcing Crew’s appointment Diageo said: “She has embedded greater external focus and connectivity across the market’s teams and strengthened commercial execution, resulting in market share gains and 20% organic net sales growth in fiscal 21, and 13% organic net sales growth in the first half of fiscal 22 [to the end of last December].

Diageo will announce its full year results in two weeks’ time. Analysts predict a further strong performance from the key North American business, which delivered 37% of the group’s net sales in the half year to Christmas and is the company’s most profitable region.

Crew is a former captain in US Army intelligence and before joining Diageo, she was chief executive of the tobacco group Reynolds American, having spent four years at PepsiCo and held senior roles at Kraft Foods, Nestlé and Mars.

Should she take over from Menezes as chief executive, Diageo will be unique among Britain’s biggest companies in having two women in the key executive roles. Lavanya Chandrashekar was appointed Chief Financial Officer just a year ago.

Replacing Crew as head of North America will be Claudia Schubert, who since 2018 has been president of US spirits and Canada. She has spent 20 years with Diageo, having started her career as a management consultant with Boston Consulting Group.

In China last week Kweichow Moutai also made a big announcement – that it has agreed to hand over most of its stake in a wholly owned subsidiary to a local government agency in a move that could help the company comply with rules that thwarted a prior attempt to list the giant drinks company.

Kweichow Moutai is a subsidiary of Kweichow Moutai Group, which in turn is owned by the Guizhou Provincial People’s Government. It is the world’s largest distiller and most valuable spirit company, having surpassed Diageo in value in April 2017.

Its A shares were listed in the Shanghai Stock Exchange in 2001 and are now valued at US$360 billion on sales of US$7.8 billion (compared to Diageo’s market price of US$98 billion).

The planned disposal will allow Moutai to revive a plan to spin off the baijiu subsidiary, just as the controlling government of its debt-ridden home province seeks to boost its revenues by doubling the value of its local alcohol production sector by 2025.

Meanwhile rival baijiu distiller Wuliangye Yibin is said to be seeking a tie up with one of the world’s major drinks groups to enhance its global distribution and sales, but especially in America where the large Chinese expatriate community is seen as a fertile market.

Diageo has a controlling stake in Sichuan Shuijingfang whose, principal brand is the super-premium baijiu Shui Jing Fang.

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