From Breakingviews - Easy Diageo succession belies new CEO’s hard job
that Chief Operating Officer Debra Crew would replace CEO Ivan Menezes in July. It’s a textbook succession. Menezes was also COO before he took the top job. The company’s shares barely budged on the news, suggesting investors were well prepared, and that they expect Crew to stick with the current strategy of boosting growth.
Still, she may struggle to get the top line rising at an exciting rate. Menezes has been gunning for 5%-7% annual revenue growth and a 6%-9% annual increase in operating profit over the next three years. However, analysts on average expect the company to miss both targets in the 12 months to June 2024, according to Refinitiv estimates. Crew has very few levers to pull to change things.
, which runs on 29%. With the price of staff, ingredients and packaging soaring, cost cutting will be hard to pull off. Crew is hoping to increase Diageo’s share of the global alcoholic drinks market to 6% by 2030 from 4.6% now, but that will require heavy marketing spending or the launch of new products, both of which will cost more and eat into margins. Diageo’s smooth succession may lay the path for a bumpy road.
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