At USL, Anand Kripalu Has to Ensure a United Spirit
Diageo has hired Mondelez’s India head to bring about a deep cultural change in its new acquisition
After more than two decades of selling soaps, detergents and, more recently, chocolates, Anand Kripalu is getting ready for a new role — selling spirits. The 54-year-old president, India and south Asia, of Mondelez International (formerly Cadbury India) is in his last few days at the chocolate-maker. He is handing over responsibilities to former Pepsico India head Manu Anand, before walking over to United Spirits (USL) next month as its CEO-designate.
In his new role, Kripalu will have to navigate many challenging transitions. Top officials close to USL say Diageo, the new dominant shareholder, has hired Kripalu with the mandate to bring about a deep cultural change. His previous two stints were with process-driven MNCs. Now, at USL, he will need to transition an entrepreneur-oriented company into one with an MNC culture.
Diageo completed the acquisition of a 25.02% stake in the Vijay Mallya-led USL, emerging as the single largest shareholder. Since then, it has been ringing in many changes in the company. Hiring Kripalu was one. He will take charge as MD & CEO once the current MD Ashok Capoor retires in April 2014. The other transition for Kripalu would be moving into the liquor business, which is far more complex and tightly regulated than fast-moving consumer goods. “Kripalu’s challenge will be to operate within the industry’s regulatory framework and old partnerships and relationships,” says D Shivakumar, the former MD of Nokia, who worked with Kripalu, his senior at HUL till 2003.
Adds Nitin Mathur, consumer research analyst at Espírito Santo Securities: “Unlike FMCG where sales can be improved if you expand reach and distribution, the liquor business is highly complex and pushing your products isn’t easy due to state regulations.”
Kripalu’s FMCG skill sets acquired over two decades won’t be without use. “His understanding of brands and marketing, given his tremendous experience, will keep him ahead wherever he goes,” says veteran adman Piyush Pandey, executive chairman & national creative director of Ogilvy & Mather India. He has worked with Kripalu for two decades. But Kripalu will need to reinvent himself for his new assignment at USL. He brings a naturally aggressive style, but will need to add to it diplomacy in managing varied stakeholders within a regulatory framework, sources who have worked with him before say. “Kripalu is a people’s person, but has this loud voice which can intimidate people and give him a bully image,” says the CEO of a global apparel company who had earlier worked with Kripalu closely. “But if you are convinced about your view and back it with strong data and logic, he will allow you to have your way.” There are also a few things that will work to Kripalu’s advantage as he eases into his new role. “USL is not a turnaround game. The focus now is to build the company for the next level of growth,” says Shiv Kumar. And growth is very much in Kripalu’s DNA. “He always operates with a growth mindset,” says another of Kripalu’s former colleagues who now heads another company. “Anand had a good sense of business P&L and knew what had to be done to push growth, business efficiencies and what are the trade-offs that will contribute to the big picture. He can take the hard calls.” Under Kripalu, Cadbury India grew from Rs 880 crore in revenues in 2005 to Rs 4,066 crore in 2012. “He is a builder, of teams and an organisation. He has this remarkable ability to execute a plan well on the ground,” says a senior colleague who now heads another company outside India. He worked closely with Kripalu between 2005 and 2012. “His biggest strength lies in executing a vision into reality.” The only glitch under Kripalu’s watch was investigations by the Directorate of Central Excise Intelligence and by the Securities Exchange Commission (under the Foreign Corrupt Practices Act) sur-
Kripalu brings a naturally aggressive style, but will need to add to it diplomacy in managing varied stakeholders
rounding Cadbury India’s second manufacturing facility in Baddi. These alleged irregularities were reported after Kraft acquired Cadbury and the fomer’s foods business, including Cadbury, was spun off as Mondelez International.
Kripalu takes charge of USL at a time when the Indian liquor market, the world’s third largest, has grown merely 4% between April and July in contrast to higher double-digit from 2006 to 2012.
USL will also start selling all Diageo brands in India under a sales agency arrangement, which will go live from next month. Diageo India will remain responsible for the strategy, marketing, import, manufacture, and bottling of Diageo’s brands in India. While the USL acquisition could help Diageo achieve its goal of generating 50% of revenues from emerging markets before 2015, Kripalu will have to achieve an acceptable level of profitability and manage the many contrasting product lines in the portfolio of USL and Diageo.
For instance, Diageo’s exposure is concentrated in the premium segment, while USL has a large amount of volume, over 75%, in the less profitable ‘regular’ and ‘economy’ segments. Kripalu will be expected to simultaneously grow the premium products and also boost volumes at the lower end of the of the price pyramid.