Starbucks’ new boss will bring consumer insight to coffee culture

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LONDON, Sept 2 (Reuters) – Laxman Narasimhan may have no experience running cafes, but the outgoing CEO of British packaged goods group Reckitt will bring insight into changing consumer habits when he takes the head of Starbucks.

At Reckitt (RKT.L), maker of throat lozenges Strepsils and floor cleaner Dettol, Narasimhan led a sweeping, but unfinished, corporate turnaround while honing relationships with retailers ranging from Walmart (WMT.N ) to Tesco (TSCO.L).

When he joins Starbucks in October, Narasimhan will need to adapt his focus to serve the millions of people who enter the coffee chain‘s approximately 32,000 stores every day.

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But his experience, including a months-long stint as chief commercial officer of PepsiCo (PEP.O) in 2019, should ensure a smooth transition to Starbucks, analysts say.

“I don’t think he had significant exposure to direct-to-consumer businesses or retail network management,” said Credit Suisse analyst Eamonn Ferry.

“He has no direct coffee experience, so you can imagine that, but he has a deep understanding of the consumer and that’s far more important,” Ferry added.

The world’s largest cafe chain is reworking its business model, shifting from a focus on cafes to mobile pickup and delivery, while facing higher ingredient and labor costs. Read more

Seattle-based Starbucks is also facing turmoil, with more than 200 of its U.S. stores unionizing in the past year and staff pushing for better benefits and wages.

Narasimhan will have six months after his arrival to familiarize himself with the business before taking over as head of Starbucks in April 2023.

His background and attention to detail suggest he will use this time to study all facets of the business, analysts said.

Shortly after becoming CEO of Reckitt in 2019, Narasimhan commissioned a strategic review, pledging to spend £2bn ($2.3bn) over three years to “rejuvenate” it.

“Narasimhan was considered to have done a good job so far,” said Jack Martin, fund manager at Reckitt shareholder Oberon Investments, adding that he had “steadied the ship” after a relatively choppy period under his predecessor. .

Reckitt, early in the turnaround, took a hit to adjusted margins to fund new investments and aligned its brands around hygiene, health and nutrition, an approach that proved popular with shareholders.

“Under Laxman, Reckitt has a newfound confidence – investors seem to be confident that everything is headed in the right direction,” said Bernstein analyst Bruno Monteyne.

“He radiates – oozes – confidence,” Monteyne added.

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Reporting by Richa Naidu; Editing by Matt Scuffham, Alexander Smith and Nick Zieminski

Our standards: The Thomson Reuters Trust Principles.

Richa Naidu

Thomson Reuters

London-based journalist covering retail and consumer goods, analyzing trends including supply chain coverage, advertising strategies, corporate governance, sustainability, policy and regulation. Has previously written about US-based retailers, major financial institutions and covered the Tokyo 2020 Olympics.

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