What does a new CEO mean for Chr. Hansen?
Mauricio Graber will join Chr. Hansen as chief executive on 1 June, when he will replace outgoing CEO Cees de Jong.
Hailing from Swiss peer Givaudan, where he served as president of the flavours division since 2006, Graber’s food sector credentials are strong.
Graber’s professional career started in the US in 1989 with The Nutrasweet Company. The Mexican national headed up Latin American business units for Nutrasweet and then US flavours group Tastemaker before Givaudan acquired it in 1997. Garber was subsequently appointed the regional president of Latin America for the Givaudan business.
While Graber may lack some of de Jong’s background in food and pharma (prior to heading up Chr. Hansen the Dutchman held posts at various food and pharma businesses, including Netherlands-based dairy Campina - now FreislandCampina - Gist-Brocades and Crucell) his expertise in Latin American markets looks set to be an asset for Chr. Hansen.
Currently, the ingredients group generates just 13% of its revenue in LatAm. The company will likely hope to step up expansion in this high-growth region – where last year it delivered organic growth of 10% - in order to reduce its reliance on more sluggish European markets. In fiscal 2016/17, Chr.Hansen’s sales in Europe the Middle East and Africa accounted for 44% of group sales, with the lion’s share generated in Europe. Organic growth stood at 7% in the period – the lowest of all Chr. Hansen’s regional interests.
Announcing the appointment, Chr Hansen chairman Ole Andersen stressed that Garber is “a truly international executive”. The enzymes-to-colours supplier noted Garner’s efforts to “accelerate [the] commercialisation of innovation” as well as his decision to invest in developing markets and experience driving productivity and integrating acquisitions.
Significantly, his time at Givaudan provides Graber with in-depth customer knowledge and understanding of food sector trends. “He has built a customer-centric culture,” Chr Hansen stressed.
According to Lars Topholm, head of research at Carnegie Investment Bank, this customer focus could prove important for Chr. Hansen moving forward. “Where Cees had a background from a customer of Christian Hansen, here you have a person who comes from a peer – different products of course but serving mainly of the same influences. You will get a CEO who has a vast customer knowledge, which is also interesting,” he told FoodNavigator.
A colours spin on the cards?
For Topholm, Graber’s ingredients background is a good fit for Chr. Hansen’s natural colours business, which has been the subject of speculation for some time.
“He is a very good fit for the natural colours business. They will be perusing a world where food companies want clean labels, which means you use natural colours instead of artificial colours. That would be an agenda that Graber has in common with this part of the Christian Hansen business.”
Natural colours is a smaller part of Chr. Hansen’s business, generating 21% of revenue compared to its cultures and enzymes unit, which accounts for 58% of total sales. While the group’s long-term goal is for the colours unit to generate organic growth of 10% compared to cultures and enzymes’ target of 7-8%, this is coming from a smaller base and some believe that the unit could be ripe for a sale or spin-off.
Topholm believes the choice of Graber as chief executive would suggest Chr. Hansen’s board thinks differently.
“If people have speculated Hansen might one-day spin-off the natural colour business, I think appointing someone with this profile suggests that is definitely not the way the company is thinking.
“It is a relatively small business in the big picture. Some in the market have speculated it could be spun-off because they don’t see an obvious fit to the rest of the business. From a production perspective that might be true. But it fits in another way. If you look at the food cultures and enzymes business one of the megatrends driving growth for Hansen is the wish for clean labels. That is also very much what drives natural colours. So our view has been they are not going to sell natural colours and I think any speculation they might do so will probably stop with this hiring.”
Not necessarily so. Vertical Group analyst Brett Hundley does not expect Gerber’s appointment to herald a significant strategic shift for Chr. Hansen – but he maintains that a sale or spin of natural colours could be pursued in the future.
“We don’t think that the appointment of Mauricio signals any type of strategic change for Hansen; Cees had a similar background in flavors when he was hired by Hansen, and we think that the company has a strong leadership in bacteria and that it intends to continue following the playbook that has led to such a strong history of out-performance in recent years,” Hundley told FoodNavigator.
However, on colours he continued: “I think Chr. continues to evaluate selling this business, and it would not surprise me if it is ultimately jettisoned. In the meantime, the company is committed to improving business dynamics while the business remains under its ownership. We think that previous attempts to sell natural colors have not worked because Hansen was most likely looking for too high of a sales price, against a business structure that was not earning enough to justify such a multiple.”