Starbucks' New CEO Confirmed! A Familiar Face in China's Consumer Market?

For more professional coffee knowledge exchange and coffee bean information, please follow Coffee Workshop (WeChat official account: cafe_style).

For more specialty coffee beans, please add FrontStreet Coffee on private WeChat, WeChat ID: qjcoffeex.

Starbucks Announces New CEO Appointment

On September 1st, local time in the United States, Starbucks announced that Laxman Narasimhan will be officially appointed as the next Chief Executive Officer on October 1, 2022, with a transition from current CEO Howard Schultz. He is expected to formally assume the CEO position and join the board of directors on April 1, 2023.

Howard Schultz will continue to serve as interim CEO until April 1, 2023, and will act as advisor to Narasimhan until 2023, while remaining on Starbucks' board of directors. During the period until he formally assumes the CEO role, Narasimhan will manage the company and team alongside Howard, deeply engage with the brand and corporate culture, and participate in Starbucks' reinvention plan.

Narasimhan's Extensive Experience

According to Starbucks' official introduction, Narasimhan has nearly 30 years of leadership experience and advising global consumer-facing brands. Before serving as Starbucks CEO, Narasimhan worked at McKinsey for 19 years, primarily responsible for consumer, retail, and technology businesses in the United States, Asia, and India. He then joined PepsiCo, serving as Chief Commercial Officer and Chief Financial Officer of PepsiCo Americas Foods, among other positions. Subsequently, he served as CEO of Reckitt Benckiser for two years.

During his tenure at these three companies, Narasimhan was known for his extensive operational expertise and excellent track record in developing purpose-driven brands. Howard's invitation to Narasimhan as CEO was based on his decisive strategic vision and decisive execution ability.

Challenges Facing Starbucks

During his time at Reckitt Benckiser (brands under the company include Dettol, Durex, Veet, etc.), Narasimhan solved several difficult problems facing the company at the time, including cyberattacks, production failures, and unsuccessful new product launches. Within two years, he brought multiple underperforming brands back on track and regained investor trust.

Today's Starbucks is also facing several difficult problems and needs a manager who can provide strategic changes for the present and future and execute them effectively. Currently, the biggest challenge facing Starbucks is operations - on one hand, employees in the United States are continuously forming unions, while on the other hand, overseas market performance is declining.

Although when Howard returned to Starbucks as interim CEO in April, he had already resolved some personnel and matters that would affect the company's subsequent operations, one person's power is not enough, and Howard's return is not a long-term solution. It still requires someone younger, more visionary, and with high execution ability to take over. Therefore, after returning, he expressed that he would find the next successor in the autumn of this year.

Although Howard has already solved some problems and also expressed that he would reshape Starbucks' corporate culture, issues with American unions, rising employee turnover rates, and declining performance in the Chinese market cannot be solved by Howard alone. Another reason for inviting Narasimhan is his deep and extensive qualifications in the consumer industry and overseas market management, with the United States and Asia being Starbucks' two largest markets.

Narasimhan's China Experience and Starbucks' China Market

When Narasimhan first took over as CEO of Reckitt Benckiser, he personally came to China, visited multiple Chinese brand stores, and met with customers and employees. At that time, he also shared his plans and focus after taking office with global employees from the China region, marking the first time a Reckitt Benckiser global CEO held a global employee meeting outside the UK.

According to the third quarter 2022 report, Starbucks has a total of 5,671 stores in China. Affected by the pandemic, China's market Q3 net revenue decreased by 40%, same-store transaction volume decreased by 43%, and same-store sales decreased by 44%. Despite this, the Chinese market remains one of Starbucks' most important markets, so after Narasimhan takes office, he may prioritize helping the Chinese market recover.

Future Outlook

As for Howard, he will continue to develop new frameworks and execute them together with Narasimhan. Some market analysts believe that even after Narasimhan formally takes over the position next year, Howard will still take the lead in many important operational decisions and matters requiring judgment of right and wrong. Other analysts believe that since Howard chose Narasimhan, he trusts his ability to manage Starbucks.

Hopefully, Narasimhan's appointment this time will bring a new chapter to Starbucks.

Image source: Internet

Important Notice :

前街咖啡 FrontStreet Coffee has moved to new addredd:

FrontStreet Coffee Address: 315,Donghua East Road,GuangZhou

Tel:020 38364473