The last time beer industry veteran Ari Mervis visited a dairy farm was as a tourist.
Now the one-time boss of Foster’s will lead Australia’s largest dairy processor, Murray Goulburn, through what is one of the most turbulent times in its 66-year history.
As he is not fully acquainted with the workings of a cow and is more at home with hops and yeast than lactose or whey powder, Mr Mervis has pledged to conduct a “listening tour’’ when he assumes the chief executive’s role on February 13.
“First I have to listen before I can speak,’’ Mr Mervis told The Australian yesterday when pushed on his biggest challenge, which is to repair the fractured and bitter relationship between Murray Goulburn and its dairy farmers after the processor slashed its milk prices and looked to claw back as much as $183 million in overpayments.
“The reality is that one has to go through a process … you have to build up the trust, respect and confidence of your stakeholders, but that’s certainly our intention and what we intend to be doing.”
The devastating price cuts unveiled in April sent shockwaves through the dairy industry and threatened the viability of many farmers. It also saw bruising fights break out between farmers, executives and politicians, and ended with Murray Goulburn boss Gary Helou forced to resign.
Mr Mervis sees the repairing of the key relationship with the farmer base as critical to the rebuilding of the processor and its spluttering business model.
“My intention will be to first understand if there are farmers that are aggrieved, or a perception of being aggrieved, to really understand what causes that,” he said. “We all understand that in a commodity environment where there are global prices that there are cyclical moves.
“We appreciate that and the next (thing) is to understand … what actually does cause the aggrievement and then see if we can best address that in a way that is suitable to all.’’
Following April’s slashing of the milk price, angry farmers walked out on Murray Goulburn, with about 200 suppliers in Victoria and Tasmania leaving the co-operative so that it had less milk to process.
It became one of the most hated companies among farmers, and investors were not too pleased either as Murray Goulburn’s unit trust stock on the ASX fell more than 60 per cent. The Murray Goulburn board, led by chairman Philip Tracy, decided to look for a chief executive with broader consumer goods experience, and managed to hook Mr Mervis, whose brewing expertise with the world’s largest beer company, SABMiller, goes back to 1989 and culminated in him taking the reins at Carlton & United Breweries when Foster’s was acquired for $12.3 billion in 2011.
“What we were looking for was someone who had a proven track record as a CEO, stabilising businesses and rebuilding them and hitting targets,” Mr Tracy said.
“His capacity to build a team to go from that phase moving forward, that’s what we saw in Ari. We think some of the challenges that exist at Murray Goulburn and the recovery we are experiencing is similar to what Ari will have experienced in his time at CUB in the last five years.’’
What the Murray Goulburn board also warmed to when scanning Mr Mervis’s CV was his deep connections with Asia, where he oversaw 96 breweries in China and the biggest beer brand in the local market when chairman of a brewing joint venture.
Given Murray Goulburn’s ambitions to export a growing proportion of its high-value dairy products, especially into China, Mr Mervis’s lack of experience in the dairy industry did not count against his appointment.
“There are certain similarities where hopefully I can bring some of my experience and skills set to bear and see opportunities for me to grow and learn in a new area,’’ Mr Mervis said. “I would never claim to be an expert on China but I will say I have a fundamental understanding of the basics of operating in China and hopefully I would be able to prove that and contribute to Murray Goulburn’s export initiative.’’
He said it was “still early days’’ when asked about the strategy he would map out for the dairy processor, but it looks like he sees the logic in Murray Goulburn continuing to move away from commodity dairy products to focus on value-added goods.
This is a strategy pushed by former boss Gary Helou.
“I do think there is a common logic that says if you are able to premiumise and move more away from commodities and more into more premium offerings … that will stand you in good stead,’’ Mr Mervis said.
By Eli Greenblat
Source: The Australian
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