Over the past two years, at least 16 major packaged-food and beverage chief executives have stepped down, according to a Wall Street Journal analysis. The departure of Campbell chief Denise Morrison earlier this month followed by CEO changes at General Mills Inc., Mondelez International Inc., Kellogg Co., Nestle USA, Hershey Co., J.M. Smucker Co., and Hostess. America’s food giants are shedding a generation of CEOs at a remarkable rate, the culmination of years of bleak sales in an industry that until recently had gone unshaken for half a century. The outgoing executives have contended with a new era of American eating and grocery shopping habits, shepherded in by millennials and the internet. Stalwart food brands no longer can consistently command higher prices from retailers, forcing management to focus on cost cuts. And as executives try to invest on change, investors want stronger profit margins. Investors said the CEO shuffle is a positive step for the industry, particularly when a new executive is brought in from outside. “There’s always a bit more intrigue when you have an external hire come into a company that’s been around for 100 years,” said Jacob Gamerman, senior research analyst at Neuberger Berman Group, which manages $299 billion of investor funds.
The top 25 food and beverage companies in the U.S. have continued to lose market share, averaging annual sales growth of 2% from 2012 through 2016, compared with 6% for the rest of the industry, according to consultancy A.T. Kearney. While each company’s situation is a little different, companies say they now have the right leaders in place to navigate next steps. Mondelez said its prior CEO improved its profit margin over the past few years while sales growth was slower than it hoped. Most of the other companies mentioned in this article declined to comment further. Until recently, big brands were synonymous with the foods they made—Kraft and cheese; Heinz and ketchup; Kellogg and cereal; Coke and soda. They won prime shelf space with retailers and had big marketing budgets that furthered their favor with consumers. And they could always charge a little bit more for their products to keep profits rolling in when costs rose or sales slowed. The strategy for success was straightforward and often attainable. Now, shifts toward simpler ingredients and shopping for food online, combined with a rise in niche, small brands and grocery-store brands, have made the old playbook irrelevant. Campbell tried to break into the fresh-food sector by acquiring Bolthouse Farms in 2012. But the move backfired in many ways, weakening profit margins and revealing the difficulties of managing the supply chain for perishables. Meanwhile, Campbell’s core soup sales continued to struggle.
Sometimes, the best way to improve the upward growth of a company is to change the upper-level management. This should be done with the goal in mind that the new CEO coming into the company will make changes that hopefully spur improvements for the company; this also requires that those staying in the company should be open to the changes instituted by the new CEO. Running a company successfully requires all employees and upper management to have the same goals in mind. Stagnation in a company can be the beginning of the end and sometimes means that a major managerial change is necessary. All business owners should pause, reflect and ask yourself; is your company being led by someone who is best suited to maximize growth? Is your company possibly in need of leadership change? Or is the company being ran by you, and you are not the right person to grow your company to the next level? One of the most important things in business is to always surround yourself with smarter people than you in the areas that are not your core competency. Like I have always said; it’s hard to read the label, from the inside of the bottle. Most companies can benefit from an outsider perspective.