Dive Brief:
- Diageo has confirmed it is seeking a replacement for current chairman Dr. Franz Humer, a Swiss-Austrian businessman who has held the position since 2010.
- Humer has been a non-executive director for Diageo since 2005 after a career at leading Swiss pharmaceuticals company Roche. He is expected to announce his retirement at the end of July, coinciding with his 70th birthday and Diageo's unveiling of its fiscal 2015/16 full-year results.
- Those results are anticipated to be an improvement over the past few years. During that time, CEO Ivan Menezes has faced stagnant sales in the U.S., the company's most profitable market, among other tribulations, such as the austerity crackdown in China.
Dive Insight:
Having been a director since 2005 and chairman since 2010, Humer was around to see Diageo rise to its peak before the company's performance began to waver after the departure of Menezes' predecessor, Paul Walsh, in 2013.
Factors like the global financial crisis and China's crackdown have been out of Menezes' control. But he has made strategic efforts to turn around sales and profitability for the company. These have included a $200 million annual cost savings plan instituted in 2014 and the appointment of former CFO Deirdre Mahlan to president of Diageo North America to aid in that market's turnaround.
Both Humer and Walsh were internal appointments groomed for their respective positions. But investors may look outside of Diageo for Humer's replacement this time around to see what a fresh pair of eyes could bring to Diageo's plans for future growth. If an outsider were chosen, speculation about other boardroom shakeups could arise.
Other speculation has surrounded the future of Diageo's beer segment. Guinness is profitable, but analysts believe Diageo could operate better as a standalone spirits company. Also, Diageo's beer division could fetch an attractive price if sold to one of the beer industry leaders. Anheuser-Busch InBev could be looking for portfolio additions, regardless of whether its SABMiller takeover is approved, and Constellation has shown strong interest in expanding its own successful beer portfolio.