PROBABLY THE BEST CEO IN DENMARK

CAREER CHANGE: 10 years ago, Carlsberg was a brewery which was getting sidelined internationally. Then it appointed a new CEO. Over the last six years, Nils Smedegaard Andersen has engineered a turnaround, so that today Carlsberg is among the most prosperous breweries in the world. On 15 November he takes over the helm of one of the world’s largest conglomerates in shipping and oil extraction, A.P. Møller-Mærsk.

When Carlsberg said farewell to Nils Smedegaard Andersen, 49, on 31 September this year, it parted company with a boss who six years earlier had taken charge of a slightly dusty brewery business, which was falling further and further behind its competitors in a number of areas. Despite several outstanding brands –according to the brewery itself ’Probably the best beer in the world’ – the group’s business was on the slide.

Six years later, one of Smedegaard Andersen’s last tasks for Carlsberg was to deliver the half year accounts, which were the best in the brewery’s 160 year history and showed a 240% value increase in Carlsberg shares since his turnaround efforts started to take effect. “Carlsberg today is a business making dynamic progress,” says Smedegaard Andersen. “The Group is advancing on all markets, especially the large growth markets in Eastern Europe and Asia. We are building and investing around DKK 5 billion in new breweries, and we are constantly on the lookout for acquisitions which can help consolidate our position. Not necessarily as the world’s largest brewery, but certainly the best.”

Nils Smedegaard Andersen, who is now shifting from heading 30,000 people worldwide, to 130,000 in the global A.P. Møller-Mærsk group, gives Carlsberg’s staff the credit for the impressive results, but acknowledges that the change of course took place during his leadership.

“I am proud to have been among the leading forces in the change of course, but it would never have happened, had not all the staff made an extraordinary effort – which they are continuing to do. Because the job is never finished. Hard work constantly needs to be done to improve the business.”

On the sidelines
Nils Smedegaard Andersen worked for Carlsberg-Tuborg for more than 20 years. He started as sales director of Tuborg International and became managing director of a number of Carlsberg and Tuborg companies. In 1999 he became a member of the group management, and from 2001, CEO.

“During the 1990s, Carlsberg was passed on the inside track by developments in the entire beverage industry,” he says. “Up to then Carlsberg and Tuborg, which merged in 1970, had only been market leaders in Denmark. Because of the indisputable quality of the products, they were represented on the world market either as export goods or as licencebrewed beers from many breweries worldwide. This provided stable earnings and a satisfactory business for the company for a long time.”

But in the early 1990s, a global acquisition wave started up, which put Carlsberg on the sidelines. The brewery’s small shareholdings in breweries around the world could not be used for anything, once the big players got hold of the share majority. The Danish brands were eclipsed by the big players’ own brands.

Russian golden egg
“In those days, we were forced to expand, enter alliances and make acquisitions ourselves which were not always that successful. We discovered for instance that we were simply not good enough to run our own breweries outside Denmark. It was a tough period, where many things went wrong.”

But in 2001 came a turning point. Six months before Nils Smedegaard Andersen became CEO, he was, together with Paul Bergquist, one of the architects of bringing the brewery activities of Norway’s Orkla in under the Carlsberg umbrella. Along with Orkla, Carlsberg gained a 50% stake in the Russian brewery BBH, which was a market leader in Russia. At a stroke, Carlsberg had become a market leader in the Nordic region, with prospects of strong growth in Russia.

“At that time, we set about making a number of development plans for a new strategy for Carlsberg,” says Smedegaard Andersen. “First and foremost we had to exploit our resources a lot better. We scrutinised the entire company, all the way from how we acted on individual markets to how we could most efficiently load and unload a beer truck, with best practice as the overall objective for everything we did. We looked at the entire chain from brewing and operation to sales and marketing. It was actually a large number of basic things, where it was a question of rationalising to improve efficiency and earnings, but where rationalisation didn’t become an end in itself, but a means of improving the entire company’s competence level.”

At the same time as the best practice exercise, the strategy formulation, management development and all the other initiatives aimed at improving the brewery group’s performance were running in top gear, the acquisition of breweries continued, especially in Asia, where China had become the great growth dynamo.

Strengthening capital preparedness
“Although we didn’t have any money, our owners allowed us to borrow quite considerably, ” says Smedegaard Andersen. “This has made Carlsberg a company that is very willing to take a risk, where we are constantly on the outlook for new acquisition opportunities which can help us gain a market lead in relation to our competitors.”

Recently the Carlsberg foundation has changed its trust deed, enabling the company to raise new capital at short notice, if it should become necessary in the ongoing consolidation process.

“With the current situation in the international brewery industry, where acquisitions and mergers happen almost every day, it is important for Carlsberg to have a capital preparedness which enables it to act,” says Smedegaard Andersen. “But I would also like to emphasise that while raised capital preparedness gives us some opportunities – it is not a duty. But if the situation arises, then we are ready.”

Must Win Battles
Capital preparedness forms a significant part of the development programme that Nils Smedegaard Andersen calls the company’s Must Win Battles.

“It comprises a number of areas where we have described where we get most out of improving ourselves. And it includes the organisational structure and capital preparedness. We constantly need to be ready to perform when required. But the most important factor was to create a completely new winner culture. To develop our staff so that they constantly take the lead in the market. We need to get better at building our brands. And that applies not only to Carlsberg’s own brands, but also to local brands gained from our acquisitions. We also need to be efficient and ready to understand what our customers want. Efficient at delivering the goods and being ready to supply the right service. We need to have the best installations, and customers must feel sure that we are there when they need us. And we must be innovative, and constantly develop new types of beverages and be at the cutting edge of a market which has never been more exciting than it is today.”

“Has Carlsberg during your leadership achieved the objectives you set when you became CEO six years ago?”

“No, although we have come a long way. We have got closer to customers, we have developed new products and we have become more efficient. But we can always do it better. We will never reach perfection.”

http://www.carlsberggroup.com