Reckitt, which also produces Durex condoms, Enfamil infant formula, and Mucinex cold syrup, was led by Laxman Narasimhan as CEO.
Starbucks Corp selected Laxman Narasimhan as its next chief executive officer on Thursday, appointing an executive recognised with revamping the producer of Lysol disinfectants to lead the world’s largest coffee chain through a “reinvention”
Mr Narasimhan was the CEO of Reckitt, a company that also produces Durex condoms, Enfamil infant formula, and Mucinex cold syrup. He announced his resignation from that position earlier in the day, and Reckitt Benckiser’s shares slumped 4% on the FTSE 100.
Starbucks is going through a rough patch. Over the last year, more than 200 of its US stores have unionised, with workers pressing for higher benefits and compensation in the face of rising inflation.
In addition, the firm is shifting its business strategy from an emphasis on cafés that promoted extended stays to mobile pickup and delivery, despite increased food and labour expenses. Furthermore, COVID regulations in China have delayed the US coffee chain’s business in one of its most important international markets.
Mr Narasimhan will join Starbucks in October but will take over as CEO in April 2023, after learning about the firm and its “Reinvention” strategy, which involves paying higher compensation to baristas, increasing staff welfare and customer experience, and re-imagining outlets.
In the meanwhile, interim-CEO Howard Schultz, who took over the firm for the third time in April when Kevin Johnson retired, will continue to run it.
Mr Narasimhan joined Reckitt in September 2019 as the company’s first outsider candidate since its inception in 1999.
He guided the firm through the pandemic, which increased sales of its health and hygiene goods, as well as a baby formula problem in the United States, which resulted in an increase in its annual projection earlier this year.
Reckitt investors praised the 55-year-old, who previously worked at PepsiCo as its global chief commercial officer, for his managerial style after helping to resuscitate the firm during a sales dip.
“He took a very balanced approach to strategy … he didn’t go in all guns blazing – he took a very systematic approach to get things right,” said Ashish Sinha, portfolio manager at Reckitt shareholder Gabelli.
Starbucks said Mr Narasimhan will spend his time with Schultz and the management team, spending time as a barista, meeting employees and visiting manufacturing plants and coffee farms during the transition period.
“While we are surprised Starbucks chose a successor outside the discretionary sector, we are optimistic Mr Narasimhan’s global perspectives as a CEO of a public multinational corporation and background in beverages at PepsiCo will serve Starbucks well into the next chapter,” Cowen analyst Andrew Charles wrote in a note
