Paul Walsh to step down as Diageo chief executive

Paul Walsh has had 13 years of success with Diageo. Picture: PA
Paul Walsh has had 13 years of success with Diageo. Picture: PA
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A DOYEN of the international drinks industry, Paul Walsh, is to step down as chief executive of Diageo after a 13-year reign at the helm of a group that includes Scotland’s biggest whisky business.

The company said that Walsh, who has overseen a trebling of Diageo’s share price in his tenure, will be replaced in July by chief operating officer (COO) Ivan Menezes.

The handover at the world’s biggest spirits company was widely expected in the City since Menezes, formerly the boss of Diageo North America, became COO last year.

Franz B Humer, chairman of Diageo, which employs more than 3,000 in Scotland and whose main brands include Johnnie Walker whisky and Smirnoff vodka, said Walsh had been an “outstanding” chief executive.

Humer said: “He has served our business, its shareholders, employees and partners with enormous imagination and dedication over the past 13 years. I know he is justly proud of Diageo and its people, and he leaves a great legacy for his successor. The board is immensely grateful for his ambitious and thoughtful stewardship of the business and its people.”

Turning to Walsh’s successor, Humer said: “We are delighted to have a leader of Ivan’s talents and global experience to succeed Paul. The handover is being made at a time when the business is strong and Ivan takes on the role of CEO at an exciting stage of the company’s global development.”

Diageo said Walsh would step down from the board at the annual general meeting in September, and retire from the company on 30 June, 2014. After relinquishing the top job he will focus on transferring “critical partner and external relationships” to his successor, the group said.

Dirk Van Vlaanderen, drinks analyst with broker Jefferies, commented: “We would not expect any significant change to strategy and see this as the natural ‘next step’ in Diageo leadership.

“Ivan is a known quantity and has done a good job managing Diageo’s largest and most profitable business segment.” North America accounts for 30 per cent of the group’s sales and 40 per cent of profits.

Menezes is expected to continue Walsh’s strategy of growing sales in the US and emerging markets, with an aspirational middle class growing strongly in the latter, to offset sluggish demand in the UK and western Europe.

The group, whose other products include J&B whisky and Guinness beer, makes more than 40 per cent of its sales in emerging markets such as Africa, Asia Pacific, Brazil, China, India and Russia.

Analysts said Menezes was likely to keep his predecessor’s target of driving up this percentage of emerging market sales to 50 per cent by 2015.

Diageo agreed to buy a controlling 53.4 per cent stake of India’s biggest liquor maker, United Spirits, last November, but the deal is yet to complete.

In December, long-running talks to buy a stake in Mexican tequila brand Jose Cuervo collapsed.

The 57-year-old Walsh had not yet decided what his next move would be, a Diageo spokeswoman said. He received £11.2 million in pay and bonuses last year, and sold £12.7m worth of shares last autumn. He still holds over £15m worth of shares in the company.