Analysis: What should 2 Sisters’ new chief executive do first?

By Rachael Porter

2 Sisters has a new chief executive following a turbulent year for the firm. So what should his priorities be?

It’s been a tough 12 months for 2 Sisters, with a food safety investigation and disappointing financial results dominating the headlines in 2017. Ranjit Boparan, president of parent company Boparan Holdings, has brought in a new broom, in the shape of Ronald Kers. The question is: will he be allowed to sweep clean?

Kers is the former global chief executive of Muller, the €6-billion international food company, and he brings with him more than two decades of experience at global FMCG companies, including Nestle and Procter & Gamble.  

He first joined Muller as UK chief executive in 2012, leading the turnaround and transformation of the business, and was subsequently appointed global chief executive in 2015.

So far so good. But will he be allowed to make the changes required to take the company forward? A leading food industry analyst told Poultry Business that he believes that Ronald Kers’ most important – and challenging – job will be to get Boparan to take a back seat.

“Boparan’s ‘hands-on’ style doesn’t sit well with being chief executive of a £3-billion turnover organisation,” he says. “I don’t think he had any other choice than to bring in someone like Kers to take on the role. In fact, I think that the board should have pushed for this to happen much sooner.”

So, is Kers the person to stand up to Boparan? “He certainly has the background and the credentials. You must be a big, serious player to take that level of responsibility at Muller, so he certainly looks like a good choice.

“But he really has to assert himself. 2 Sisters is too important to UK food manufacturing for it not to succeed. The major retailers also need the company to do well and the board needs to support Kers and recruit some good managers, who can build strong and lasting relationships with the major retailers.

“For too long, 2 Sisters has been on this ‘merry go round’ of losing customers and then gaining customers. The company needs some stability to be sustainable.”

So Kers clearly has a big job to do. 2 Sisters is a very large UK and Dutch business and one of the largest UK food manufacturers. And the company is also an important supplier when it comes to poultry, as well as other food products.

And there-in lies part of the company’s problems, according to the analyst. “The reality is that 2 Sisters probably shouldn’t have bought Northern Foods, back in 2011,” he told Poultry Business. “And I think that it should sell off the parts of the business that it acquired in the deal that are not poultry-based – particularly the frozen food brands.”

“Boparan’s business experience is poultry based. That’s what 2 Sisters does best. As a poultry manufacturer, the company takes some beating – it’s extremely good at it. But it’s not about brands or other food products. And I hope that Kers will assert himself and sell off more of these non-poultry brands.”

Boparan Holdings recently sold the Goodfella Pizza’s brand for £200m: “And this will go some way to putting the company’s finances back on track and making up the pension shortfall. But there are other brands to sell, including at least two frozen foods and Fox’s Biscuits. The latter should command a good price.”

The analyst says that he was surprised that Boparan purchased Northern Foods in the first place. “There was no logic to it and it also seemed to be extremely rushed. Convenience-food producer Greencore was set to buy the business and then Boparan swept in at the last minute and trumped them. But all the company really bought was a lot of debt and Boparan, in my opinion, has little expertise in the business and the long-life grocery brands that it took on. They didn’t suit his style and it was hard to see how the brands would fit into the existing poultry processing business. The whole deal looked like something that was done on a whim.”

It certainly incurred a lot of debt and created a significant liability. Profits have fallen by almost £10 million year-on-year at Boparan Holdings, following the hygiene breaches in 2017 that forced the firm to close its West Bromwich cutting plant for several weeks to retrain staff.

The analyst says that Kers’ job will very much be about getting 2 Sisters back to focusing what it’s good at – being the UK’s best poultry processor.

Boparan also released a statement about Kers’ appointment, saying that it: “Underlines our serious intention to do what we say we’re going to do. The past 25 years has been all about growing 2 Sisters. Today we have reset our direction and we are focusing back on our core strengths and getting back to what we do best – delivering great value, great quality food for our customers.

“We have already started with our commitments to greater transparency, a stronger colleague voice, and simplifying a complex organisation. But there is so much more to do and Ronald can take the business performance to the next level. After 25 years as CEO, I am now taking on a broader leadership role as President of the BHL group, building on my entrepreneurial background and strengthening our financial position.”

Many, no doubt Kers included, will be holding him to his word to ‘take a step back’.

Promar International’s agri food divisional director John Giles agrees that appointing Ronald Kers is a good move. “He certainly looks like the ideal candidate – and for many reasons.”

He cites Kers’ experience with brands: “He’s a ‘brand’ man – Muller has a wealth of successful ones. And that’s a vital ingredient for a company that’s purchased brands but doesn’t have any experience of managing them successfully – whether that’s selling them off or developing them.”

Kers also has plenty of international experience, which would certainly be important post-Brexit. “Who knows what the deal will be in 2019, but the UK could be trading with the US, Oceania and other countries outside the EU. Kers has plenty of experience here,” says Giles.

“Strong customer relationships are also vital to any chief executive’s role and, again, Muller prides itself on these. Large ‘family run’ businesses don’t succeed without good relationships. It’s also an innovative organisation, and Kers should bring some of the experience with him to 2 Sisters.

Muller is also a milk processing company – it takes a commodity (milk) and adds value to it. “And that’s what 2 Sisters does – it takes poultry and adds value. So Kers comes from a ‘commodity’ background.

“And I do know that further investment will be essential – and in the right areas. Whatever the outcome of Brexit – and the trade deals struck – it’s vital that a company of this size and calibre focuses on improving efficiency.”

With this in mind, the recent announcement that the food group is investing in its Willand factory – and expanding operations that will give it a greater ability to process, cut and pack products for its retail customers – should come as no surprise.

2 Sisters’ goal is shorter, more efficient supply chains and fresher, quality products coming out of its Devon-based poultry processing hub. And it also announced the creation of 300 new jobs and 20 new apprenticeships.

An increase in cutting and packing capacity and new thigh de-boning equipment has bought about the need to take on the extra staff, boosting the current headcount to more than 1,200 since January with 160 new colleagues taken on. The 300 additional new roles will take the factory numbers up to 1500.

A company spokesperson said: “It’s not about being bigger; it is actually about having a smaller more focused footprint that has the capacity to carry out the whole operation.

“We have delivered robust revenue generation despite tough market conditions. And there is an ongoing consultation exercise underway regarding the potential closure of three UK poultry sites as part of a move to consolidate poultry operations around modern specialist manufacturing sites.”

It certainly looks like there will be plenty of change with Kers at the helm. And it is expected to be for the better.

 

 

 

 

 

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