Big Food filling C-suite ranks with a new kind of CEO
- Six of the world's ten biggest food companies, including Nestlé, Mondelez International, Kellogg and Hershey, have replaced their CEOs in the past three years, according to Reuters. Campbell Soup and Hain Celestial also are actively looking for the next generation CEO.
- PepsiCo is the latest CPG titan to replace their CEO after naming Ramon Laguarta to replace Indra Nooyi who announced plans to step down this week after 12 years in the role. Laguarta is a PepsiCo veteran with 22 years at the company.
- "I'm hearing people saying for the very first time things like 'We're going to recruit a head of marketing with a background in analytics'," Oliver Wright, global lead for consumer goods and services at Accenture Strategy, told Reuters.
Things are changing for packaged food and beverage manufacturers. Big food companies across the industry are grappling with rapidly shifting consumer trends as shoppers move away from processed foods toward items viewed as fresher and better for you. At the same time, consumers are snacking more than ever and increasingly looking for products that mesh with their on-the-go lifestyle.
These seemingly conflicting interests have left CPG companies struggling to keep pace with consumers and trendy, more nimble upstarts as they look for the right mix in their portfolios that cater to these changes without alienating their core customers. While one solution that large firms have taken to is M&A, many also are looking to replace their top management in hopes of introducing new skills into the C-suite.
Increasingly, CPG companies are searching for CEOs who can step into the role and compete with smaller brands, embrace social media as a way to connect with customers, boost transparency, increase their e-commerce presence and, most importantly, return their company to growth. Although many of the new CEOs that are stepping into the role are company veterans, some are coming from outside the food space.
Nestlé's new CEO Mark Schneider came from a healthcare background. He is focusing on increasing investments in high-growth areas like coffee and water, hiving off businesses like its U.S. confections, wringing out inefficiencies and dealing with mounting pressure from an activist investor.
Nestlé is not the only company looking outside its ranks for leadership. About half of the new CEOs hired in the sector in the past five years have been internal candidates, down from roughly three quarters over the past 20 years, according to Reuters.
As part of that trend, Kellogg’s appointed Steven Cahillane, formerly president and CEO of Nature’s Bounty, as the company’s new CEO late last year. Cahillane’s background aligns well with the growing preference of the consumer for healthy, on-the-go options. Kellogg is likely hoping he will bolster its sales with his knowledge of the health and wellness space as well as his success in establishing successful e-commerce channels which are becoming indispensable in the industry.
Although the origin of new CEOs varies, one thing that is apparent across the industry is the declining average age of these top executives. Reuters noted that many freshly minted CEOs are in their early 50s, contrasting with the average age of CEOs in the S&P 500 which was 57.4 last year.
It seems that companies are looking for fresh thinking when it comes to growth. With sales slipping and stock prices falling, CPG companies are desperately trying to realign themselves. By introducing leaders who have experience in digital marketing, analytics, brand storytelling and other industries, there is a good chance that change is on the horizon.
The unexpected is what the industry needs if it going to lure consumers back into interior aisles. Today’s consumers want to believe in what brands are doing. If these legacy companies are unable to glean the information about what their shoppers are interested in supporting, no matter how many acquisitions they make, they may never resonate with the market’s new consumers.