Culture change is always the hardest thing to achieve for any business, but reorganising and reshaping an entire business away from a long-held strategy and moving it in another direction is no easy task. It’s one, however, that Julian Momen has set himself.
“I want us to be the odd one out,” he says, referring to rival beer giants. “How do we differentiate ourselves – when you see them all herding that way, and there’s one in the middle, looking, thinking, ‘what about that way?’ – I do want us to be the odd one out, just because we have to be, we’re number four.”
With a background in finance, numbers are clearly important for Momen, but having inherited a troubled ship a little over 12 months ago, he’s made some tough decisions, one of which has seen the business switch away from volume chasing, and focus back on value, a risky strategy for a brand very much in the mainstream lager space.
An accountant by training, Momen certainly doesn’t lack experience when it comes to working in the food, drink and branded sector. With more than 30 years under his belt, he even started his career in brewing at Grand Metropolitan in the pre-Diageo days.
His branded experience is also impressive, having been a key member of the team that launched Häagen Dazs to the UK market with huge success.
Meeting the challenge
So Momen is not somebody who shies away from risk and was keen to embrace the opportunity to take over the reins at Carlsberg and drive the business forward: “I need the challenge,” he says. “I’d had three CEOs in three and a half years, and thought, maybe I could have a go at this, and do a job for them.”
That emotional connection with the business, brewing and brands, was really, really key, if you haven’t got that love inside your own business, I wonder how you can then express yourselves to customers in that passionate way
He admits he thought it was an outside shot. “I didn’t expect them to be interested. I thought it would go to a person from sales or marketing.”
But his approach of looking to put a human touch in the business struck a chord and he found himself moving from chief financial officer to chief executive officer. “One of the most important things was to put the heart back into the business. Ultimately, [Carlsberg] is about brewing and brands, and it had lost it’s way a little bit.”
This is a view not only in the UK, but back home in Denmark, with chief commercial officer Jessica Spence pointing out that the business had perhaps lost it’s rudder in the past five to 10 years, forgetting the heritage of the company that was founded by JC Jacobsen 170 years ago.
Momen says the passion was still there in the company: “If you speak to anyone in Carlsberg, they’d tell you they love the business and they do.” But the passion was misdirected and he’s working to correct that: “I’m not saying we’re there yet, we’ve got a long way to go, but I think it has to start with our people.
“That emotional connection with the business, brewing and brands, was really, really key, if you haven’t got that love inside your own business, I wonder how you can then express yourselves to customers in that passionate way.
“So that was my read on the job, and that’s ultimately the reason why I went for it, and they obviously saw some-thing and gave me it, and I’m still here a year later.”
Approach not working
He inherited a business that was slugging it out in the mainstream lager sector against three major competitors, and that approach was not working:
“I think we were caught in this mindset of volume, a volume-driven, sales-led business, where volume was the priority and it was so because we’d got a brewery that makes millions of hectolitres of beer and we needed to sell it. And we had a logistics network, that also needed to be filled, and that was proving to be more and more difficult.
Our previous strategy started with a vision – which existed up until the end of 2015 that was ‘Number 2’ by 2020. And actually, when you really pared that back, it was going to be bloody difficult, if not impossible and that led to a lot of disbelief in the organisation, so it was about creating a new vision that was believable and a bit daring.”
Some tough decisions were needed, and Momen rose to the occasion.“When we looked at it, we realised we don’t make any money in our distribution business and actually we make a loss, and that took away the focus on our brands.”
He said that analysis had already set an agenda in which the company was starting to think about taking out stock keeping units (SKUs), a process that was accelerated by the news in mid-2015 that Tesco was going to delist the brand. “That probably gave us that impetus to follow through on what we were already planning anyway.”
He said the decisions being made to remove a “slug” of SKUs, rather than do it in a “piecemeal fashion” had an impact on the brewery, affecting a third of the workforce. “And this was a brewery that had never seen a redundancy. That was pretty tough,” he adds.
Taking a difficult decision
The other tough decision came in the distribution side of the business. “We took the difficult decision to exit our porterage business, and we looked at what we had left, which was our own distribution fill for our secondary business, and that didn’t make any sense. So following a review of our logistics, in June 2016, we announced to the team that we were going to outsource the operation.”
So the philosophy that we’ve been talking about is value ahead of volume, that’s how we phrase it. It’s not value instead of volume, just to be clear. Volume is still really important for us, but it’s value, and creating value, not just for ourselves but also for our customers and that comes in the shape of what we’re selling and how we’re selling it
For some CEOs, such news would be made from head office, with the executive teams safely behind their desks, but for Momen, that’s not his style.
“It was really important to me that the exec members were at the depots giving them that news and not being seen to be sat in Northampton and hoping everyone else would relay that. So I was out in Croydon, and that was tough.”
The third leg of the stool has also seen the restructure of the commercial teams into two business units, one focused on national customers, pub chains and grocery, and the second on the independent sector and free trade. The two units are backed up by their own “engine rooms” of support.
While he admits the structure is not fully there yet, they’re making good progress. “Last year, we hit all our metrics and that’s the first time since I’ve been here that we hit them all, and I must admit, I was especially pleased for the sales team because it’s been tough for them.
“So the philosophy that we’ve been talking about is value ahead of volume, that’s how we phrase it. It’s not value instead of volume, just to be clear. Vol-ume is still really important for us, but it’s value, and creating value, not just for ourselves but also for our customers and that comes in the shape of what we’re selling and how we’re selling it.”
A shift in focus
Part of the new strategy has seen a shift in focus toward craft beer as well, to expand the company portfolio. As well as the introduction of its Backyard Brewery range, the company recently purchased London Fields Brewery, a move that has signalled a shift from not just supplying a range of strong international craft beers, but to add its own local craft beers to the mix.
Speaking at the time of the purchase, Momen said: “Local craft in the UK is actually growing faster than international craft and it doesn’t exist in our portfolio at the moment.” To bolster its beer credentials, the company has also launched House of Beers, which Momen describes as a premium sales and marketing division. The team is made up of what he says are a different breed of sales people. “If you put the normal sales guys there, and one of these guys here, you wouldn’t think they work for the same organisation.
"They have tattoos, beards, earrings, they are ex-chefs, ex-barman, ex-restaurateurs, they’re people who’ve been on the other side but they know what these guys want and how to talk with them.”
The House of Beers team is aimed at the company’s platinum accounts, what Momen describes as the “influencers”, which he hopes will spread the word and demand for the company’s products far and wide.
“House of Beers was a big signal to our organisation about that commercial agenda, which was very much about premiumising our business, taking us into a different space, from volume sales led, to value, brand led.”
Rebrand and relaunch
That premiumisation agenda has also seen the company rebrand and relaunch Carlsberg Export in recent months, along with a new advertising campaign featuring Danish superstar actor Mads Mikkelsen, and Momen says early results are looking promising, particularly in
the off-trade, while he admits the on-trade is more of a slower burn.
He concedes the company still has work to do with the mainstream Carlsberg beer, but says “we had to start somewhere and we all felt Carlsberg Export needed to be the first one we started with”.
So it’s all change at Carlsberg and that pace of change isn’t likely to slow down anytime soon. “I think we’ve made a bold step and that’s exactly what I want us to do, I have a principle of right results with the right behaviours, it’s really important to me.
“However that doesn’t mean we can’t be edgy – we need to be edgy because, actually, we’re number four in the marketplace, we don’t spend the sorts of sums the others do, so we’ve got to differentiate ourselves in a different way.
“We want to be the most admired and daring brewer, that’s what we’re really after, and I think what the team has done is exactly that.”