Froggatt's S&N call up is surprise' to trade

By Claire Hu Scottish and Newcastle, Britain's biggest brewer, has surprised the trade by appointing a company outsider, Tony Froggatt, as its new chief executive. It is the first time S&N has appointed someone from outside the company as its chief executive in nearly three decades. It comes after a year-long search. Froggatt, 54, was president of Seagram Spirits and Wine Group for Europe, the Middle East and Africa, until the company's break-up in 2002. Before that he worked for International Distillers and Vintners for 15 years, including a stint as chief executive of Cinzano Group Worldwide. Froggatt holds dual British and Australian citizenship and, while he has no brewing experience, has considerable international expertise. Institutional shareholders are said to have asked for someone with international experience to move forward S &N's expansion plans in a difficult European marketplace. But his appointment has surprised pundits who had tipped three internal candidates for the job ­ finance director Ian McHoul; John Nicolson, head of S&N's international beer operations; and John Dunsmore, who runs its UK beer business. Froggatt, who currently lives and works in Sydney as a consultant and will take up his new post on 12 May, is a virtual unknown on the London financial scene, but is known by former colleagues for being a "team player" and "relentless" in executing his strategies. Stuart Price, of analyst WestLB Panure, said: "He has international experience, which is a plus if you believe S&N can afford to continue to grow internationally. "The length effort that has gone into finding this candidate has been considerable. It comes as a positive surprise and shows S&N is trying to break the mould." Price said the key issues Froggatt would have to tackle were how S&N was going to pay for its expansion plans, and whether he believed it was feasible to maintain a sizable pub estate alongside its brewing operation "The real long term question is how S&N is going to sustain dividend payouts and how it is going to pay for international expansion", he said. "It is a long process for S&N to get rid of its pub assets and I do not think Froggatt will change policy ­ S&N will carry on disposing of pubs as and when it needs cash." Froggatt will also be examining the company's botched and costly distribution re-organisation in the UK, and overseeing the sale and leaseback of 600-700 pubs to Nomura to raise acquisition funds. He was, however, giving away few clues about his business strategy, saying simply he was looking forward to helping the company prosper on the international stage. He said: "The company has developed impressive strategic positions and excellent commercial relationships in many of the biggest and best beer markets in Europe and beyond. I look forward to making the most of opportunities that lie ahead." Froggatt will fill the place of Sir Brian Stewart, who has been chief executive since 1991 and executive chairman since 2000, and who will become non-executive chairman of S&N. Froggatt will receive an annual salary of £630,000 and options worth up to three times salary.