1 (2) Philip Clarke, group CEO, Tesco
Philip Clarke may have turned down £400k from this year’s bonus pot, but the Tesco CEO still has enough capital in the industry to make his rivals - and some of his colleagues - wince.
To read the press surrounding Tesco’s 2011/12 results, you’d be forgiven for thinking Clarke’s empire was heading the same way as Greece. But the truth is, whoever is holding the reins in Athens (other than Angela Merkel) can only dream of Tesco’s 7.4% topline growth in the teeth of a worldwide recession.
In fact, Tesco’s £72bn ‘economy’ would put it in the top quarter of nations, nestling between Cuba, Iraq and Syria. And some unkind souls might say that the UK’s only true multinational is run with a similar degree of democratic process.
Certainly, Clarke does not suffer fools gladly. And some, like deposed UK CEO Richard Brasher, have found that you can be anything but a fool and still be surplus to requirements. Indeed, as powerplays go, his ruthless reassumption of direct control in the UK, less than a year after he delegated responsibility for the still dominant UK business, takes some beating. “You can’t have two captains in a team,” said Clarke.
Whether or not there is a vendetta against Sir Terry Leahy’s old guard (and we prefer to believe there is not), there have been enough high-profile departures (the likes of Andrew Higginson, David Potts, Carolyn Bradley, Laura Wade-Gery and Colin Holmes) to give the conspiracy theorists a field day.
Comparisons between the two Liverpudlians are also instructive. While Sir Terry could be academic, demure and highly polished one minute only to round on his UK trading directors with surprising ferocity the next, with Clarke what you see is what you get. Not without a wry Scouse charm and certainly with a keen wit, Clarke lets you know exactly what he thinks of you, whether he needs to put it in so many words or not.
Having started out on the shop floor, he loves his stores and his managers, and consequently many of them adore him - even those who found themselves at the wrong end of Tesco’s drive to run the stores “too hot for too long”, as the Tesco boss put it.
There’s some good stuff happening, too. After the embarrassing debacle of the Big Price Drop in the UK business, the store refits are looking good, and the extra hours going into stores can only mean an improvement in Tesco’s tarnished service image. Growth rates outside the UK core remain impressive.
Yet this has been the toughest year in recent memory, and critics both internal and external have argued that Clarke’s bull-in-a-china-shop approach to restructuring has been partly to blame. Tesco needs a strong leader, and Clarke ticks many boxes - strong on detail, strong on commitment, strong on experience and strong on confidence. But, like Greece, an organisation as complex as Tesco needs a clever politician as well as a man of steel, and leadership means more than barking orders.
If Clarke succeeds - and the jury has not even been appointed yet - then none of this will matter. Shareholders, staff and customers will love him in equal measure. In the meantime, Clarke must be finding it lonely at the top. He knows time is short - he’s had more than a year, and if Tesco isn’t turning by the 2013 agm then a mutiny won’t be far off. For now Clarke can make or break the UK’s most powerful retailer. What a responsibility! What power!
2 (3) Paul Walsh, CEO, Diageo
In these tough times, a 59% rise in a chief executive’s pay cheque is a tough case to put to shareholders of any fmcg company. Perhaps not if you’re Diageo CEO Paul Walsh. The company has seen its share price rise 170% to more than 1,500p per share since 2000, under his watchful eye.
Of course alcohol tends to be a good place to be in a downturn, but it is his successes in the faster growing emerging markets - which now account for about 40% of sales - that have been the driving force for Diageo’s business of late. In the three months to 31 March the Smirnoff vodka and Guinness maker reported a 1% dip in European sales against double digit growth in Africa, Latin American and the Asia-Pacific, which led to an 11% hike in total sales, buoyed by the recent acquisitions of Mey Icki, Serengeti Breweries and Meta Abo Breweries.
Now Walsh is looking to China. His latest complex swoop to acquire a majority stake in leading spirits group Sichuan Chengdu Quanxing is an impressive coup. It marks the first time a foreign company has gained control of a significant Chinese brand and has put Diageo in the driving seat to tap into a younger generation of middle class Chinese consumers in a country where the luxury goods market is growing. And fast.
3 (8) Paul Polman, CEO, Unilever
Remarkably, for a man at the helm of an fmcg empire with a £57bn market cap, much of the publicity Paul Polman has attracted surrounds his contribution towards trying to save the planet.
Polman has made sustainability a central plank of Unilever’s marketing message, calling on businesses to change the very nature of their approach to capitalism to reflect endangered resources and reduce emissions.
However, Polman has also received plaudits for the way Unilever has weathered the financial storms facing its global interests, from rising commodity prices such as crude and vegetable oils, to slow growth in developed nations.
Despite warning of a difficult year ahead, Polman recently presided over Unilever’s best first-quarter figures in five years, with underlying sales growth of more than 8%, partly thanks to pushing up its prices. And if getting Unilever shareholders to back his recent 6% pay rise - after a series of snubs in other boardrooms - isn’t a sign of power, we don’t know what is.
4 (6) Justin King, CEO, Sainsbury’s
Seven years of like-for-like growth. A record-breaking Christmas. Market-beating full-year results. The high-profile King continues to confound Sainsbury’s critics.
Admittedly, King has committed a lot of cash to store expansion - the returns from last year’s £1bn investment were just £30m in profits, which depressed Sainsbury’s share price. On the other hand, its momentum is such that, unlike Tesco and Morrisons, its share price is moving in the right direction. And its carefully considered response to the Asda Price Promise through Brand Match, introduced last autumn, also compares favourably to Tesco’s disastrous Double the Difference website.
Online is also of growing importance (now bigger than Asda’s) while Sainsbury’s is ahead of all its rivals in terms of Click & Collect. With King also throwing Sainsbury’s full weight behind the great British summer, there’s a feelgood factor about Sainsbury’s for which the big four’s most experienced campaigner can take credit.
5 (5) Dalton Philips, CEO, Morrisons
Philips has had to cope with a dose of second season syndrome this year. The media darling in 2010/11 in Bradford, he hit the ground running with visionary plans for c-stores and fresh produce displays, made daring raids on rivals for key appointments, boosted training, experimented thoughtfully with online retailing and introduced major logistics and range overalls. At the time, Morrisons also happened to be the fastest growing of the big four.
Fast forward a year and while he can look to strong full-year sales and profits growth in the year to January, Morrisons has undeniably hit its first bump in the road since the Irishman took the helm. Christmas trading was lower than expected and, at its Q1 management statement earlier this month, it reported its first fall in like-for-like sales for seven years.
Philips is not panicking, however. He has made rivals sit up and take notice with his bold approach. And with continuing acquisitions on the supply chain side, we expect a future promotion.
6 (4) Andy Clarke, CEO, Asda
The ‘other Clarke’ has been relatively quiet in the past year. This is partly because he’s had succession issues of his own to deal with, including the departure of former COO Simon King last summer, and more recently CMO Charles Redfield together with the promotion of marketing svengali Rick Bendel to Walmart’s global leadership team. In the resulting reshuffle, Judith McKenna (qv) has emerged as an industrious and effective No2, in charge of day-to-day operations.
Now reporting into his former colleague, Dave Cheesewright - promoted last September to oversee Walmart’s UK, Africa and Canada businesses - Clarke has been busy improving Asda’s reputation for quality, as well as developing its smaller store offer after integrating its 147 Netto stores. Any hopes of adding Iceland Foods to its growing smaller format store portfolio melted at the start of this year as its joint bid with Farmfoods came to nought. The market awaits Clarke’s next move with anticipation.
7 (New Entry) Jeff Bezos, Amazon CEO and founder
Almost two years since its launch into grocery, Amazon is still a minnow, hardly registering on the radar for suppliers. Nevertheless, as the fastest growing retailer in the world, Amazon and its visionary CEO loom large on the industry’s horizon.
Bezos brought over former head of US grocery Bram Duchovnay in the autumn to lead the UK grocery operations. He followed up by hiring Asda’s former executive development director Doug Gurr who, according Asda CEO Andy Clarke, “transformed Asda.com into Britain’s second-biggest home shopping service”.
The heavyweight appointments have added strength to rumours surrounding Amazon’s UK grocery expansion plans. It’s been rumoured that Amazon is eyeing Ocado (Bezos has met with the Ocado management team and expressed admiration for its delivery service.) On the other hand, there have also been reports that Amazon is gearing up to launch its own chilled food service in a move that would cost it £350m.
The carrot luring Bezos is IGD’s forecast that the UK online grocery market will double to £11.2bn by 2016. And with Amazon’s dominance in non-food, he’s certainly got deep enough pockets.
8 (9) Mark Price, MD, Waitrose
There’s just no stopping the Chubby Grocer. Once again, Waitrose grew faster than the big four and increased international sales by 28% after signing a series of export deals with major foreign retailers.
While innovations introduced via its Heston Blumenthal (qv) tie-up continue to attract publicity, Price has put the focus squarely on value. The Essential range was expanded to 1,500 lines and now accounts for 17% of sales. In October, Waitrose upped the ante by promising to run at least 1,000 deals a week. And earlier this month, in what Price called “a seminal moment”, he expanded its price-matching with Tesco to cover all its 7,000 branded groceries (albeit not including products on promotion).
However, it’s not all been plain sailing. The value campaign has hit profits, down 5% to £260.6m in 2011/2012. And Waitrose has been inundated with customer complaints about the search and navigation functions for its online store, relaunched in March last year.
9 (10) Ranjit Boparan, CEO, 2 Sisters Group
Boparan has carefully constructed a protein powerhouse in UK fmcg over several years, but 2011 was particularly eventful, and surely marks a new chapter in the development of his 2 Sisters Food Group business. With Northern Foods - which Boparan stole from under the nose of Greencore’s Patrick Coveney (qv) - now fully integrated following a complex restructure, the tycoon has set itself himself ambitious growth targets to pay off the debts he’s servicing.
Sales last year were £2.1bn. The plan for 2012 is to overtake the £2.6bn turnover of Premier Foods - thus turning 2 Sisters into the UK’s biggest food business - and he wants to hit £3bn in sales by 2015. As ever own label will play a part. But fish seems to be a key ingredient, too: earlier this year, 2 Sisters won a £4m contract to supply Morrisons with fish. Later this year Birds Eye will launch a range of frozen fish, co-branded with the Harry Ramsden’s name, which is owned by Boparan. No mention of biscuits and pizza, though.
10 (14) Charles Wilson, CEO, Booker
Analysts were aghast last summer when a fifth of shareholders, advised by PIRC, protested against Wilson’s remuneration at the cash & carry giant’s agm.
“Investors should be celebrating, not undermining, [a] talent that has delivered such impressive results and rare returns,” said one. And it’s hard to imagine how shareholders can complain about Booker’s share price. From 17p when Lehman Brothers went bust in 2008, it hit a high of 85p in April. Even Amazon’s Jeff Bezos (qv) can’t beat that.
This week, Wilson unveiled another sparkling set of results. Profits rose 26% to £90m on sales up 7.3% to £3.9bn. Like-for-likes rose 6.1%. And while its sales and market cap are relatively low, Wilson deserves to be in this company. He’s outmanoeuvred the big retailers with his successful expansion into India. And his latest brainwave - the creation of a new state-of-the-art foodservice business called Chef Direct - suggests he has a blueprint for growth long into the future. It starts trading next month.