- Menezes to retire in June after a decade in charge
- Shareholder returns ‘strongly outperformed’ FTSE during his tenure
- Former Reynolds American boss has big boots to fill
Shares in spirits giant Diageo (DGE) softened 0.6% to £35.61 on the bitter-sweet news CEO Ivan Menezes is to retire after 10 successful years steering the Johnnie Walker whisky-to-Smirnoff vodka maker.
The long serving Menezes will step down from the premium drinks giant’s board this summer and hand over the reins to its current chief operating officer Debra Crew, who will become one of the FTSE 100’s few female CEOs.
WHY MENEZES WILL BE MISSED
Menezes will certainly be missed. One of Britain’s longest serving FTSE CEOs, he has transformed Diageo into one of the world’s leading premium drinks companies and one accounting for 10% or £2 billion of the UK’s total food and drinks exports.
As Shares outlined here, the company owns some of the world’s most iconic alcoholic beverage brands including Johnnie Walker, Smirnoff and Guinness, an unrivalled portfolio that confers pricing power on the business, crucial during inflationary periods, and underpin Diageo’s consistent profitability.
In today’s statement, Diageo said that during Menezes’ tenure it has ‘made great strides towards its ambition to become one of the best performing, most trusted and respected consumer products companies in the world.’
Diageo has ‘grown significantly’ during this decade and now sells over 200 brands in more than 180 markets. It has become ‘the number one company by net sales value in Scotch whisky, vodka, gin, rum, Canadian whisky, liqueurs, and also tequila, a category in which only eight years ago the company had no substantive position.’
The beverages behemoth also stressed that over the past decade, its total shareholder returns have ‘strongly outperformed the FTSE 100’, while the company has increased dividends every year, with progressive payouts even continuing during the pandemic.
WHO IS DEBRA CREW?
Before her appointment as chief operating officer in October of last year, Crew headed up Diageo’s business in its largest market, North America, and was formerly the CEO of cigarettes group Reynolds American.
There, she delivered ‘strong performance growth’ before British American Tobacco (BATS) acquired the Camel-to-Newport maker for $49 billion in 2017.
Crew insisted she is ‘focused on continuing Diageo’s extraordinary track record of building world leading brands and enhancing our reputation as one of the most responsible businesses in what I believe to be the most exciting consumer products category’.
THE EXPERT’S VIEW
‘Farewell to the architect of Diageo’s success over the past 10 years,’ commented AJ Bell investment director Russ Mould, who also pointed out that an internal appointment theoretically lowers the chances of a radical shift in strategy at Diageo.
The market reaction, with a mere 0.6% decline in the share price, ‘shows that investors aren’t worried about big changes to the business. Instead, this looks like as smooth a transition as an athlete passing the baton in a sprint relay’, said Mould.
‘Menezes is the sixteenth longest serving CEO in the FTSE 100. Importantly, Crew becomes the thirteenth female boss of a FTSE 100 company, based on the CEO role or chair for investment trusts. That shows progress in bringing more equality to the boardrooms of UK-listed blue-chip companies, but many would argue a lot more needs to be done.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Tom Sieber) own shares in AJ Bell.
