You must learn from your mistakes — Patrick Coveney interview

Greencore’s chief executive speaks to Gavin McLoughlin about his company’s transformation, and his other business and personal interests

Patrick Coveney on what he’s learned from this time in charge at Greencore —

PATRICK Coveney once told a large audience that when he was younger, his ambition was to run a big Irish business. With that achieved — he has been running convenience food company Greencore for close to a decade — what is his next ambition?

“I find that a hard question to answer in the specifics. There are loads of really interesting things for me to do in Greencore for the next five years or more. People often say to me: ‘God, you’ve been doing the same job for nine years, it must be time for you to do something else,’ but actually I haven’t been doing the same job for nine years because Greencore has changed so much in that period. All that means that my job is very different.”

Coveney (46) is in the Dublin offices of Core Media, the media buyer of which he has recently become chairman. Later in the day he’s travelling to London, where he will be until Friday. The day before, he was in Leeds. There’s not really such a thing as a typical week but, in general, he’s out of Ireland three days a week, and in America once a month, visiting Greencore factories, meeting staff, shareholders, and customers. Travel goes with the territory when you run a plc with most of its business outside the country where you live.

“I love the job that I have so I’m not looking for any sympathy on this but there are some tradeoffs,” he says. “I like being out in the business, but there are things you miss at home. You see less of your kids growing up than you otherwise would, but the travel per se I don’t mind. I don’t find it particularly stressful, I’m used to doing it — but you know, you make different choices in life to do the things that you choose to do.”

One of those choices was to become chairman of Core — run by chief executive Alan Cox.

“I was curious about it because it’s not an industry that I’m particularly close to. Traditional brand marketing or advertising wouldn’t be a feature of what Greencore does because we don’t run our own consumer brands, but I got to know Alan quite well and I became more and more intrigued about the kind of business Core Media was.

“I felt that what the team here was looking for, in terms of having an outside perspective with more of an international business experience, would be interesting for me and helpful for them. It’s very much a non-executive chairman role but it’s a really interesting business. Another feature of it that I really like is that it’s very Ireland-focused. A lot of what I do, whether it’s with Greencore or Glanbia (where Coveney is a non-executive director), is very internationally focused. I live here, I’m from here and so the opportunity to work with a business that’s really connected with every element of the Irish economy was interesting for me.”

Being interested in the Irish economic story is in Coveney’s blood. His father was a Fine Gael minister and his younger brother Simon is now housing minister. The two brothers bear a strong physical resemblance but perhaps more striking is that their voices sound almost exactly the same. The elder brother “thought a lot” about entering politics when he was younger but says that’s not going to happen now. But he has a lot to say about the current geopolitical turmoil and it gets him visibly animated.

“People don’t talk about this very much but I mean Irish economic performance generally has been unbelievably strong. What Ireland has achieved in the last six years in economic recovery from the despair that we were at is remarkable and economic historians around the world will write about this as one of the most extraordinary economic recoveries they’ve ever seen. The challenge is that very few people feel that. And so the sentiment around where Ireland is, be it economically, or socially, or politically is either negative, or kind of begrudging. And that’s not unusual to Ireland by the way.”

He has seen a similar attitude in the US. “America’s had actually pretty strong economic performance over the last five years but it’s not part of the narrative there. Everyone think it’s terrible and it needs to be made great again or whatever,” Coveney says with palpable disdain.

“Britain was actually navigating itself out of the economic crisis reasonably well economically and yet they’ve thrown all the cards up in the air by saying they’re going to leave the European Union,” he says.

Now that it has happened, does he feel there are risks to the Irish economy? “There are and I think Brexit and how Britain leaves the European Union and what that means for Ireland’s relationship with Britain and Ireland’s relationship with the European Union is going to be a very big issue ... the trade deal, I think there’s plenty to run on that. Britain at the moment is talking about the elements of its exit deal in cliche rather than in substance. You’ve got Brexit means Brexit, or we’ ll have a red, white, and blue Brexit, I mean what the hell does that mean?”

After the Brexit vote, Coveney said it would have been better for Greencore if the ‘Leave’ campaign had lost, but that he thought the business would be “fine”. Six months on he says he’s surprised it hasn’t had more impact on the business.

“We’ve seen no impact whatsoever on volumes or on consumer sentiment generally in the UK. The sales that we have now are where we might reasonably have expected them to have been before Brexit — they haven’t gone down, they haven’t gone up particularly. Our products have been very resilient and the areas that we’re growing in continue to grow.

“Where we do see impact is on the impact of the exchange rate changes in terms of generating inflation. We probably would have expected back in May or June that there would have been another year of maybe even slight deflation in terms of raw materials and packaging, and that’s not the case. So we’re likely to see maybe as much as 5pc inflation in raw materials and packaging and the biggest driver of that has been sterling weakening versus the dollar and versus euro. So that’s going to make food more expensive in Britain. It’s starting to do that now.

“When it begins to become more specific and you get into sector by sector engagement, then we’ll move away from discussions on whether it’s hard or soft Brexit or what colour it is, or whether Brexit means Brexit, or a whole series of other things that are frankly meaningless.” Food is a sector in which Ireland has produced global leaders like Kerry Group and Glanbia — companies whose performance over Coveney calls “absolutely remarkable”. He says his aspiration is to have Greencore viewed in the same light. “What we’ve done over the last 10 years has been very positive, and now we need to do the next 10 as well.” The company has spoken for a while about extending its reach beyond Ireland, the UK, and the US but nothing is “particularly imminent” in that regard, Coveney says, adding that any such move would likely flow from a relationship with an existing customer who wanted to bring Greencore products to a new market.

The conversation turns to other businesses in other sectors that Coveney admires, and Michael O’Leary inevitably comes up. “I mean, it’s easy to get caught up in some of the peripheral stuff and the hype and the media profile and the commentary on non-business things. But if you look at the substance of the business that Ryanair has become, in a sector that has destroyed value everywhere forever, and yet, in that space, he’s built probably the finest airline business in the world.

“But he’s obviously a poster child for business in Ireland. There are others, if you look at Kerry, Glanbia, CRH, Kingspan, there are some very fine businesses from Ireland, the common feature of many of them, Ryanair aside, is that while they started with an Irish heritage, they’ve become truly global.”

Greencore is pretty global now but recent speculation has been that it might be about to become a little more Irish in one sense. There has been some speculation that the company plans to establish a secondary listing on the Irish Stock Exchange. “We’re not seeing a huge demand for it at the moment,” he says. “But that could change. We will look at whether it will be helpful both to us and our retail shareholders for people to be able to trade shares in Ireland as well as in London.”

Coveney is riding high after recently sealing a deal to buy Peacock Foods for $747m (€716m). It is transformational for the company and has been well received by the market. But it hasn’t always been plain sailing.

“There are loads of mistakes,” he says. “The trick when you make mistakes is to actually use them to learn from them. The things that have helped me develop most rapidly have been recovering from mistakes that I’ve made.

“When I became ceo of Greencore, we had a pretty significant fraud or financial misstatement in one of our businesses.

“We had to restate our whole group results — we’d to issue a big profit warning on the back of it. It wouldn’t have been unreasonable for our board to have chosen to remove me as part of that, given that I had been cfo beforehand and I was ceo when it happened. They chose to support me in fixing that and I used that then as a way of making a whole series of changes in people-process control and actually how I behaved as ceo.

“There were lots of different factors that led to it happening, but the essence of the issue is that we ran with a very decentralised structure and in one of those decentralised business units we had people who were deliberately choosing to mis-state the financial performance so that the business appeared to trade in line with budget when it wasn’t really. And had been doing it for maybe as long as five years.

“I used that as a way of making a whole series of changes that I probably would have made over maybe 18 months having just become ceo — and I did it all in one afternoon. That was an example of how sometimes you can learn from an event but then you have to do something about it. I personally consider that to have been the biggest single mistake and compensating change, but there have been loads of things like that where things go wrong.

“No successful leader can be a successful leader without a high level of self-awareness and being able to understand ‘right, these things went wrong and here’s how I’ve learned from it’. Now they may not choose to talk about it in the Sunday Independent, but that’s a different matter.”

‘What Ireland has achieved in the last six years in economic recovery is remarkable’