Tony Froggatt: Aussie newcomer making his mark in the beerage

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The Independent Online

Tony froggatt is not worried if no one likes him. He wasn't employed, he says, to be popular. Which is just as well, coming as it does from a man who has just given 170 long-suffering Scottish brewers the sack. As chief executive of Scottish & Newcastle, his decision to close Edinburgh's 150-year-old Fountainbridge brewery could be swiftly followed with the closure of another, in Newcastle, if analysts' warnings are to be believed.

Even Mr Froggatt himself, a characteristically blunt Aussie, admits that, "the UK has the potential for greater efficiencies ... right across the board". Choosing his words carefully, he adds: "I believe John Dunsmore [the head of Scottish & Newcastle in the UK] has done a great job during very hard times. Last year the company was under a huge amount of pressure. But during that time the UK business has started to turn around. We are tackling the fundamentals. But we're not over promising; not going for a big bang."

The moves are part of the newcomer's drive to make the brewer "best in class", which when you consider the dire year it had in 2003 - it was the worst performing stock in the FTSE 100 - is no idle goal. Mr Froggatt, a former Grand Met man, was brought in last May to replace Sir Brian Stewart who, as practically a founding member of the UK's beerage, had clearly outstayed his welcome as boss of Britain's biggest brewer.

Although Sir Brian is credited for turning S&N from a parochial leisure conglomerate - it used to own the holiday group Center Parcs as well as bingo clubs and hotels - into the world's seventh-biggest brewer, he did so at the expense of its stock market reputation: axing the dividend last year after promising it was safe was the last straw for many investors. The "big bang" approach, which propelled the group on a multibillion-pound acquisition spree over the past four years starting with Kronenbourg in France, failed, Mr Froggatt admits, from the well-heeled confines of the brewer's St James's London offices.

We meet last week, just two days after S&N has reported its preliminary results (pre-tax profits up just 1 per cent at £471m) and Mr Froggatt was being realistic. "It is a case of either we evolve and we evolve quickly or we are going to be in trouble," he says of his £45m cost-cutting mission in the UK. He is desperate to install the sense of "urgency" that he says was so lacking when he arrived at the outset of the brewer's much-anticipated auction of its remaining pub estate. He knows S&N is trying the City's patience and is anxious that this year, for once, the brewer won't disappoint. Hence the cautious tone struck about its outlook for 2004: "It's all about credibility and not over promising," he says, his soft Australian accent the result of many years spent away from his Sydney home and, perhaps, his father's British passport.

His challenge is to "rebuild some of S&N's foundations and move from being a series of disaggregated companies to put it all together". Only by unifying the group's disparate parts - it has breweries as far afield as Chongqing in China and Lisbon - and putting some serious money behind its brands will he transform S&N into a brewing force to be taken seriously.

That much of the 20 per cent leap in the group's stock market valuation since the start of the year is ascribed to takeover speculation, gives you some idea of magnitude of Mr Froggatt's task. If this means giving the 160 employees of its Tyne brewery the heave-ho, then so be it. He is pragmatic about his mission and knows that, "you cannot grow your business just by cutting costs". But he disputes the City view that S&N will wind up as part of another brewer such as Denmark's Carlsberg. "You don't have to go and merge to overcome that problem. Being bigger is not necessarily being better."

With Mr Froggatt, you get a strong sense that business is personal. At 55, he knows that S&N is his last chance to wind up in the drinks industry hall of fame. Although he had spent the previous two decades with IDV and Seagram, where he moved after losing out on the top job when Grand Met merged with Guinness to become Diageo, his appointment as head of S&N took analysts by surprise because he has always had a low profile. In fact, his appointment pretty much took him by surprise: just one year earlier he had set sail from the UK for Australia with the intention of seeing out his days from his Sydney Harbour-side pad, with his (second) wife and two Miniature Schnauzers for company.

He hit the ground running on being made chief executive, spending most of his first seven months in the job on the road. "I've been everywhere, man, as they say," he chuckles, betraying the inevitable Aussie sense of humour that lies behind his oft-brusque exterior. He visited all of the group's operations, including its Yapivo brewery in Yaroslavl, some 300 miles east of Moscow. His trip included a roadshow to the company's top 500 managers last November, when he spared no one's blushes in telling them what the City and its shareholders felt about the group.

"There were a few fairly tough messages," he says. "About the fact that we could not afford to be complacent; that we had to change our way of working; that we had to focus behind our brands; that we had to find resources to be able to put behind our brands from within; and that change had to come, and it had to come urgently."

The group's recent sponsorship coup with its latest bottled concoction Bliss shows that Mr Froggatt means business when he says S&N must start throwing more money behind its brands. The Chardonnay wine and fruit juice-blended drink sponsors the latest series of the ITV cult-hit Footballers' Wives - not Mr Froggatt's target market, he says when I ask if he's a fan, but evidence that the marketing man's declaration of a "fundamental belief in the power of brands" is no idle assertion.

Born in Bangkok, Thailand, he claims he led a "typical expatriate life" for someone whose father worked for Shell. "I was all over the place. It was a bit of a nightmare of a childhood because I changed schools so often. I moved everywhere from the UK to Asia to the Middle East. I was in Egypt during the Suez Crisis," he pauses to catch his breath. "We were evacuated. I was at school there in Cairo, then Australia, then England [where] I finally ended up getting my A-levels."

As a result, he says, he "loves" Asia, and plans to spend "a lot of time travelling" there when he finally retires. His roots are there, he adds, explaining that his old man spent most of the war locked up in Singapore's Changi jail, for "scuttling" the ships left behind in the harbour. Not that Mr Froggatt's passion for the Far East means we can expect S&N to embark on another spending spree there, the recent purchase of a 20 per cent stake in China's Chongqing brewery notwithstanding. "I'm too practical and hard headed for allowing emotions to get in the way of business like that," he says.

Although he may have only taken over officially as chief executive last May, he was party to one of the group's most crucial board meetings of recent years when it decided to sell its retail estate, slash its dividend and buy the struggling cidermaker HP Bulmer. His presence was at the end of a telephone line, some 12,000 miles away at his parents' beach house in Byron Bay, New South Wales. "I sat on the phone in my parents' bedroom, being served drinks to sustain me. My ear felt like a braised lamb chop by the time I'd finished. Eventually, as people started to head off to bed, I got kicked out and ended up on the staircase being fed by my very supportive wife, various beers and other lubricants to keep me going. I did play a part, but I can't say I was what you'd call an influential part of those discussions."

His influence has not been in doubt ever since, much to the chagrin of those Fountainbridge brewers. Just before we wind up, he tells me in no uncertain terms: "I would like to make S&N the best in class. That's my ambition; that's what would really make me feel good. If I leave this company in a hell of a lot stronger position than I found it in then that would be a great accomplishment for me." Somehow you can't help but rate his chances.