Starbucks’ new chef may blackmail the coffee brand after a drastic stint at maker Dettol

It was a question no one could answer. We were with a friend in the music industry who had a lucrative line writing jingles for commercials.

“When you think of Dettol, what comes to mind musically?” How you write a song to sell a brand of sanitizer was beyond us.

I remembered our reaction when it was announced that Laxman Narasimhan was leaving his position as general manager of Reckitt Benckiser, maker of Dettol, for the top job at Starbucks. He trades not only the Thames Valley house, Dettol but also Durex condoms, Calgon detergent, Nurofen painkillers and Strepsil throat lozenges, for Seattle and the headquarters of the world’s biggest and most serious coffee chain.

To say it seems like an unlikely match, packaged goods and coffees, is an understatement. At first glance, it’s hard to see what Narasimhan brings to the job of CEO of Starbucks, how he landed the job.

But he was chosen, after what would have been a rigorous search by Charles Tribbett III, then co-CEO and advisory arm of the board of directors of Russell Reynolds Associates, now vice president of the recruiter. Apparently, the 55-year-old was identified as a likely successor to Starbucks chief Kevin Johnson a year ago.

Johnson retired earlier this year and Howard Schultz returned to run Starbucks for the third time. If anyone was identified with the runaway success of Starbucks, it was Schultz. He first led the company in 1987, and in more than four decades as chief executive and chairman, he has grown the company from 11 stores to more than 28,000 in 77 countries.

Laxman Narasimhan has no experience in direct-to-consumer sales, but he initiated a step change.  Reckitt Benckiser

Narasimhan goes from persuading Tesco and Walmart to stock and prominently display his floor cleaner and list of, let’s face it, not exactly exciting household items, to serving the millions of customers who visit a Starbucks every days.

He has no direct-to-consumer experience or managing a retail network. He also did not run a cafe or operate a coffee machine. But he is an expert in consumer behavior, in predicting and responding to their changing habits, and in making them choose his items in preference to others.

What he has in his arsenal is a resume that, apart from Reckitt, includes a stint as chief commercial officer of PepsiCo, and also nearly 20 years at consultancy and turnaround specialist, McKinsey & Co.

Narasimhan showed that at Reckitt he was not afraid to implement radical change. His first action upon taking office in 2019 was to commission a strategic review. It saw him commit to spending £2billion over three years to, as he put it, ‘rejuvenate’ the company’s lineup. Margins suffered as he financed new investments and reoriented the group towards health, hygiene and nutrition brands.

The task ahead of Narasimhan is to repeat the magic at Starbucks.  Bloomberg

Investors, skeptical at first, were won over. After a turbulent period that had seen questions raised about his very survival, Reckitt is sharp and focused. It is a group that has regained confidence, the shareholders are delighted and these doubts have disappeared.

The task ahead of Narasimhan is to repeat the magic at Starbucks. That’s the point, and goes to the heart of why he was anointed: for all his size and iconic status, the global brand isn’t in great shape.

At Reckitt, he called it rejuvenation; at Starbucks, we are already talking about “reinvention”. Even before his appointment, the company was introducing better pay for baristas, planning improvements to staff wellbeing and the customer experience, and reimagining stores.

Once edgy, the original coffee chain that swept the world has been overtaken by cooler, smarter names. Starbucks, in short, is no longer the star it once was. The pandemic has put more emphasis on mobile pickup and delivery. The branches were empty and tired.

Starbucks is not immune to rising costs and supply chain challenges. Nothing is more sensitive or subject to comparison and discussion than the price of a cup of coffee. He also has to deal with the fact that his points of sale are often in the wrong places, because working methods have changed. Suburban independent cafes boomed thanks to WFH; The office district and downtown Starbucks, by comparison, struggled.

Narasimhan's new employer is not a happy nirvana.  Getty

Despite his once-hippie image and love of positive messages, Narasimhan’s new employer is not a happy nirvana. In the United States, employees at more than 200 branches have joined unions in the past 12 months. Others are following suit. Staff are demanding higher benefits and salaries.

The feeling persists that Starbucks has become too big, too sprawling, too disconnected from its origins and now seems old-fashioned and lacking in the innovation it was once famous for.

Schultz, who remains on the board, is behind a reshuffle – he tellingly decreed that the new CEO should be external, citing a need for new talent and skills in his senior leadership.

Enter Narasimhan. Except that he doesn’t take care of it right away. In recognition of the dramatic transition he is making and his strengths as a strategist and planner, he is taking six months to familiarize himself with the company before officially becoming CEO in April 2023.

Management is going through a delicate period. He is known as a retail merchant. Every aspect of Starbucks can expect to be scrutinized and taken apart as it decides its moves.

Why Narasimhan? On closer inspection, it makes sense. A song for Dettol? Alas, I still can’t answer that one.

Published: 07 September 2022, 13:50

About Jeffery L. Parker

Check Also

Canadian coffee brand Tim Hortons opens in Delhi-NCR for the first time

Indians love their hot coffee, and we have witnessed this through the growing demand for …