May 192015

Lagunitas logoIn December of 2005, over breakfast in New York, the than CEO of Warsteiner made it perfectly clear that he expected the US operations to start making money.  After 25 years in the US, Warsteiner had never made a profit, even when the exchange rate was favorable.  The upside of the favorable exchange rate did, however, allow the operation to invest, grow, and become established across the country.

Given this mandate, during the first full year at the helm, the operation turned a solid profit.  From that point, and over the next several years, I was able to reduce the long term debt of Warsteiner’s US operation.  This was not done without the cost of some sales.  Changing the strategic direction of field sales and marketing did put the operation in solid shape, and it stayed that way until Warsteiner’s CEO/owner retired, turning over the helm to his daughter.

This month, Molson Coors announced that they had appointed their CFO acting CEO.  Molson Coors had used not one, but two top headhunting firms to find the ideal candidate. Ultimately, they decided to go the internal route.  Really?  They could not find anyone?

MC’s recently released first quarter numbers continue the trend the company has had for a number of years.  Net income was up +4.4%, yet net sales were down again -.9%.  Revenues were up +1.6% against STRs down -2.7% and shipments -2.5%.  The announcement of an internal CEO, with a CFO background, will change little.  Going forward, expect the financial numbers and trends to remain the same.  This is what the board must want!

On the other hand, Lagunitas, using the same headhunting firm, during the same time period that MC had retained the firm, found a new CEO.  Lagunitas is one of, if not the, fastest growing crafts in the US.  This year shipments are up 50% and depletions up +41%.  The new CEO, Maria Stipp, is not from the beer industry although she began her career in chain sales at Miller Brewing years ago.  She comes back into beer from a company that recycles consumer’s old phones, MP3s, tablets, and more.  She also helped build the video game Mortal Combat at Activision into a billion dollar business.

Perhaps the appointment of these two CEOs, more than any other measurement, indicates the differences between the craft segment and the established domestic segment.

MC’s board appears to be more than comfortable with the direction of the company and expect MC to continue to lose market share and volume while increasing revenues and profit.  Lagunitas, on the other hand, looks to continue its dramatic growth by bringing in new leadership skills honed in industries that were successful in developing products for those consumers who support crafts.  The comparison will be interesting to follow.

Someday over time, MC’s sales declines will eventually bottom out and Lagunitas’ sales will hit a wall.  How these beer companies and others handle the change will be a defining moment of their history.  Real leaders challenge the status quo which will cause controversy.  Lagunitas knows this and it shows with their new CEO appointment.  MC does not. This is sand, not rock.

 Posted by at 6:00 am

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