Why Big Food Is Having a Mass CEO Exodus
The Fortune article, “Why Big Food Is Having a Mass CEO Exodus,” quoted Russell Reynolds Associates Consultant Andrew Hayes about the cause behind recent CEO departures in the food industry. The article is excerpted below.
The past year and a half has been open season for headhunters in the food industry.
It started back in May 2016 when Mark Smucker became CEO of the family’s namesake jams and jellies maker, replacing his uncle who had served in the top job for 15 years. Then that fall, a wave of leadership change began at Big Meat: First Hormel orchestrated a passing of the chief executive baton in October, and Tyson followed in December. At the end of the year Whole Foods co-CEO Walter Robb officially stepped down, leaving John Mackey as the high-end grocer’s sole head honcho. That same day, Paul Bulcke abdicated at Nestlé after eight-plus years on the throne.
As the months progressed so did the departures—and among them some of the industry’s lions. Muhtar Kent left his post at the pinnacle of Coca-Cola this spring after more than eight years on the job; Ken Powell did the same at General Mills at the end of May as he crept up on a decade tenure; and some two months later Mondelez CEO Irene Rosenfeld announced her plans to retire from the maker of Oreo, Cadbury, and Trident after more than 10 years as the head of the $26 billion snacking giant.
When 3G acquired Heinz and subsequently merged it with Kraft, it immediately implemented what Fortune’s Geoff Colvin has described in these pages as a “blitzkrieg of cost cutting.” Kraft Heinz now has the highest margins among its Big Food brethren, proving to some that management teams should be able to increase earnings despite the sector’s intense pressures. “Companies have been on edge ever since,” says Andrew Hayes of executive search firm Russell Reynolds Associates. “They’re concerned that they might be the next victim and have tried to 3G themselves to preempt it.” The $58 billion Unilever found itself in the eye of the 3G storm when Kraft Heinz made an unsolicited bid for the Anglo-Dutch company in February. Though Unilever’s board roundly rejected the overture, the company did later move to cut spending and improve profitability. But in the packaged-goods realm, the Brazilian threat remains. 3G is “able to cut costs in a very unemotional and clinical way,” explains food industry veteran Alan Murray, who has operated in both the Big Food and startup worlds. Since much of the industry’s management has come up through the ranks, “they cannot cut as brutally,” he says.
To read the full article, click here.