Squeezed into a corner

After being manoeuvred out of his job with brewer Inbev, Müller’s new UK chief executive Stewart Gilliland may have swapped the frying pan for the fire. His predecessor left after 18 months and his German bosses have a reputation for intrusiveness, writes David Benady

Stewart Gilliland is going from pint pots to yoghurt pots in his new role as chief executive of Müller Dairy UK. The former Whitbread sales director – who worked across the brewing operation as it was acquired by Interbrew, then merged with Brazilian brewer Ambev to create Inbev – this week ensconced himself in the Shropshire town of Market Drayton.

Gilliland was squeezed out of his previous role as president of Inbev’s Western Europe operation at Christmas. Some believe he was the victim of a pincer movement between the company’s Brazilian and Belgian merger partners (Ambev and Interbrew), who are installing their own executives into leading positions and forcing out former Whitbread heads in the process. Inbev’s UK marketing director, Phil Rumbol, also left recently to take up a similar role at Cadbury Trebor Bassett.

But in his new job, Gilliland will have to negotiate his way through the politics of working with the company’s demanding German owners, the Müller family. In particular he will work with Theo Müller – grandson of the founder, Ludwig – who has run the company since 1970.

Gilliland is the company’s first chief executive, implying he will have greater control than previous UK bosses. He follows in the deep footsteps of Ken Wood, the former Express Dairies marketer who set up Müller in the UK in 1986 and, as managing director, built it into the market leader. He left in 2004 to take charge of Weetabix, making way for Andrew Harrison, the former Nestlé marketing director who is now an interim marketer at Boots. But Harrison’s term as Müller general manager was short-lived and he left after 18 months.

Neither Gilliland nor anyone at Müller was prepared to comment for this article, but one source says of Harrison’s tenure/ “He worked hard to try and create a perception that he was in control and keeping the Germans at bay. But he used to feel their intrusive touch. He formulated the strategy, but he had to be canny. It is true of any family-owned business, whether in retail or brand, that you need strong communication skills.

Müller momentum

“What Müller had was an extraordinary decade of product innovation that expanded the category. Recapturing that innovation will be very important to anyone trying to succeed there.”

Müller’s success through the 1990s came from its introduction of the Corner range of twin-pot yoghurts. Other innovations include Müllerice and Müllerlight, and there has been a constant stream of introductions such as the Yogz children’s range. But the company has found that rivals are now developing new products at an even faster rate, and supermarket own-brand products are providing stiff price competition.

On the positive side, Müller dominates the £882m yoghurt sector – which grew by 5% last year – with nearly 40% market share. Market-leading brand Corner grew 5% to £175m while second-placed Müllerlight grew 11% to£130m. However, smaller rivals grew faster, though from a smaller base. Bio Activia was up nearly 70% to £50m and Yeo Valley Organic rose nearly 20% to £53m.

In other areas, Müller is struggling. In the &£530m adult desserts sector, M&Auumlllerice fell 5% to £36m and Müller’s children’s products were down 6% to £23m. In the burgeoning £280m drinking yoghurt sector, Actimel is racing ahead of Müller Vitality and has taken over 40% of the market. All these figures come from Müller’s own 2005 report on the Short Life Dairy Products Market.

The increased competition has meant advertising spend has rocketed with Danone nearly doubling its outlay last year to £30m. Müller’s spend increased by a third to nearly £20m, with its Lead a Müller Life lifestyle campaign, created by TBWALondon. The agency was appointed under Harrison’s tenure, though a source says Gilliland would be unlikely to review the account as a matter of course, only doing so if the results indicated a new campaign was necessary.

Raising the profile

There will be need for strong new advertising as the company is understood to be moving into the area of snacks, encouraging people to increase the number of times people eat yoghurt, such as at breakfast times.

Gilliland’s experience in selling to supermarkets gained at Whitbread and Interbrew should help with the task of encouraging trade buyers to keep giving Müller shelf space and facings against the growing competition, and to ensure messages about innovation are well communicated to the trade.

In the 1990s, Gilliland worked at Whitbread Beer Company as sales director with responsibility for both take-home and on-trade sales. In 1998, the Whitbread Beer Company merged its sales and marketing departments and put Gilliland in charge as sales and marketing director. Three years later, Interbrew appointed him UK managing director after its takeover of Whitbread. In 2003, he was sent to become zone president for Canada, which one insider says was quite a wrench to his life. He subsequently returned to become president of the troubled Western Europe region, leaving in December 2005 without a job to go to.

Trading up

A source says: “As he comes from a sales background, he has got a great feel for trade customers and consumers. He doesn’t bring 20 years of marketing nonsense to the equation, he has more of an instinctive, gut approach.”

While this could also be said of Wood, there are sharp differences between them in terms of management style, according to the source. Where Wood was forceful about exactly how something should be done, he managed to keep the Müller family on his side as sales boomed.

One observer says Harrison may have lacked sufficient humility to charm the family. But Gilliland is considered to be a completely different kettle of fish in terms of diplomatic skills. “Ken is very self-assured about what he thinks is right and people have to go with that. Stewart isn’t like that, he motivates well, gives clear guidance and sets clear objectives; he manages people fairly,” says the source.

Such diplomacy will be much needed as Gilliland settles into his new role, working with marketing director Chris McDonough and trying to keep Theo Müller sweet.