Dusseldorf The world’s largest coffee chain, Starbucks, is getting a new boss: Laxman Narasimhan will join the company in October and take over as CEO in April 2023. This was announced by the US company.
The Indian-American manager was previously head of Henkel’s British competitor Reckitt Benckiser. The consumer goods manufacturer produces, for example, the disinfectant Sagrotan, condoms under the Durex brand and the room fragrance Air Wick. At Reckitt, the German billionaire family Reimann is one of the major shareholders.
Narasimhan surprisingly resigned on Thursday morning after only three years in office. “Although it is difficult to leave the company, it is the right decision for my family and me,” said the 55-year-old. Narasimhan’s family lives in America.
In his home country, big tasks await him at the coffee giant Starbucks with its almost 35,000 coffee shops. There he has to take care of the increasing union pressure. The chain has hired more workers in the United States than it has in a long time, but is trying to convince them that they don’t need a union through new equipment, for example. Starbucks has also been paying a higher hourly wage of $17 since August.
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“Starbucks’ rapid unionization is happening faster than anyone thought,” analyst Mike Halen told Bloomberg. Narasimhan will have “a lot of work”. Rising inflation is likely to curb consumer spending worldwide, and consumers could save on Starbucks coffee specialties, which are expensive above average.
For the time being, the new boss is still standing next to the old one
In addition, the company is struggling with weak sales figures in China, although Starbucks has defined Asia as a growth market. The background is the strict Covid rules in China. Although some outlets in Shanghai are reopening, business has been slow to recover.
Working with the previous boss Howard Schultz could also be difficult. The 69-year-old will initially be at the helm alongside Narasimhan before the new signing takes over alone in the spring.
New bosses often have a hard time when long-standing predecessors still have a lot of say in the company. And Schultz still wants to restructure the management and redesign the Starbucks cafes. Details are to be presented in the middle of the month.
Narasimhan is well compensated for his efforts: the qualified engineer receives an annual base salary of $1.3 million, a signing bonus of $1.6 million and stock options worth $9.3 million.
The manager will receive a $1.6 million signing bonus.
(Photo: Bloomberg)
In the system catering sector, newcomer Narasimhan has not yet had any in-depth knowledge. In order to better understand Starbucks, he should first get to know coffee manufacturers, employees and business partners.
At least the manager has more than three decades of experience in the consumer goods sector. Before joining Reckitt, he worked at the US beverage company PepsiCo, which is a business partner of Starbucks, and at the management consultancy McKinsey. There he completed positions in Tokyo, Toronto, Silicon Valley and New Delhi. In addition to several Indian dialects and English, he also speaks German.
Successful reorganization of the consumer goods group
Starbucks was up 2 percent at the start of Friday’s trading after the new boss was announced. Shares of Reckitt, on the other hand, fell nearly 6 percent after Thursday’s departure in UK trading.
Analysts take this as an appreciation of Narasimhan’s performance. After several bad purchases made by his predecessor Rakesh Kapoor, the top manager was primarily concerned with the reorganization of the group.
Production was disrupted under Kapoor and the core brands were sluggish. In addition, the former Reckitt boss had gotten involved with the takeover of a manufacturer of baby and children’s food.
Narasimhan prescribed an austerity program for the group, and he also benefited from increased demand for disinfectants during the pandemic. He strategically overhauled the healthcare business with the painkiller Nurofen.
Last summer, Narasimhan also sold Reckitt’s Chinese baby food business to a financial investor for $2.2 billion. Narasimhan is said to have even planned to spin off the entire baby food division.
However, the group had raised its sales forecast, also because the company had delivered more baby food to the United States. This had become scarce there after a recall.
Narasimhan no longer has to make such decisions. His successor was Nicandro Durante, who worked in the tobacco industry for many years.
More: Coffee flat rate: How the Reimann family wants to attack Starbucks with Espresso House