- Debra Crew will replace retiring Deirdre Mahlan as the new president of Diageo North America on July 1, according to a release.
- Crew has served as a non-executive director on the Diageo board since April 2019 and will immediately step down from this position. Previously, Crew served as president and chief operating officer of RJ Reynolds. Additionally, she held multiple roles at PepsiCo as president of North America Nutrition, Americas Beverages and the Western Europe Region divisions.
- "Debra’s extensive experience in consumer businesses will serve Diageo and North America well as we continue to progress on our ambition to become one of the most trusted and respected consumer products companies in the world,” Diageo CEO Ivan Menezes said in the release.
North America is a critical region for Diageo, comprising about 35% of total net sales in the first six months of the most recent fiscal year. Within that region, U.S. spirits make up the majority of those sales. America also posted the highest percentage of organic growth out of all the regions. As the new president of North America, Crew will have the task of continuing this strong growth that Diageo has reported in the U.S. since 2015.
As alcohol companies have struggled to combat shrinking sales in areas such as beer, Diageo has managed to buck that trend. The alcohol giant has posted organic growth and steady, strong sales from the U.S. market.
But that growth hasn't come without controversy. The British company recently agreed to pay $5 million to settle an investigation by the U.S. Securities and Exchange Commission alleging that it pressured distributors to purchase more product than necessary to meet internal sales goals and inflate financial results. However, Diageo said the issue the SEC investigated was in fiscal years 2014 and 2015 so it is unlikely to have played a part in Mahlan's retirement.
The North American segment is a large and important financial driver for Diageo, and Crew will need to continue to innovate and introduce products that respond to consumer trends like zero-proof, functional beverages and RTD options to maintain that momentum.
Despite having worked with Diageo for barely a year, Crew brings valuable experience in the CPG space to the role. Crew served three years at RJ Reynolds, including the last 12 months as CEO. During her tenure, she worked with cigarettes as they have have fallen out of favor with consumers and watched the expansion of e-cigarettes and vapes in the market place.
In addition to experience in maintaining market relevance of brands in an unfavorable industry, Crew also has experience working in beverages from her time at PepsiCo. This combination of practical knowledge from the two sectors will benefit Diageo as the company looks to cater to consumers.
But Diageo is not the only alcohol company to shuffle leadership recently. Molson Coors named Gavin Hattersley CEO last September following slipping sales. At Pernod Ricard, there was a similar changing of the guard as Paul Duffy, CEO of North America, handed the reins to Ann Mukherjee last year. At Constellation Brands, Bill Newlands also became global CEO last year.
These recent upheavals indicate these legacy companies are looking for innovation through leadership to turn around their financial futures amid a changing consumer environment. U.S. consumers have been drinking less beer each of the last five consecutive years, and U.S. wine consumption decreased in 2019 for the first time in 25 years. Alcohol volumes overall have fallen as well.
Diageo is working to combat these new market realities by investing in nascent brands that deliver on consumer trends, such as the nonalcoholic spirits brand Seedlip. The company also launched Guinness Open Gate Pure Brew nonalcoholic beer in 2018 and introduced two ultra low alcohol pre-mixed drinks under its Gordon's label as an option for consumers who decide to moderate their alcohol intake.
Crew will be no stranger to redefining a product portfolio in a legacy industry, but the timing of the change is less than optimal. She is taking over following the $5 million SEC settlement and as the spread of COVID-19 upends the U.S. and global economies.