By Anil Bhoyrul
Alex Andarakis has transformed drinks giant Aujan in just two years. T his week we feature on the cover the very impressive Alex Andarakis, CEO of drinks giant Aujan. Andarakis is a remarkable man in many ways, not just for nearly doubling the company’s profits in two years, but more significantly, being the first “outsider” to run Aujan for over 100 years. Is this a new trend we are seeing in family businesses?
|~||~||~|Alex Andarakis has transformed drinks giant Aujan in just two years.
T his week we feature on the cover the very impressive Alex Andarakis, CEO of drinks giant Aujan. Andarakis is a remarkable man in many ways, not just for nearly doubling the company’s profits in two years, but more significantly, being the first “outsider” to run Aujan for over 100 years. Is this a new trend we are seeing in family businesses?
Mishal Kanoo has written on this subject previously, and having met Andarakis a few times now, it is clear that the task he faced was even more daunting than he expected. Aujan – without Andarakis – had grown into one of the most successful privately owned drinks companies in the world. It was operating in over 20 countries, had some great licensing deals and a strong stable of original brands. Revenues were over the US$200m a year mark. Things were going, to put it mildly, pretty well.
But to his credit, Aujan founder Adel Aujan decided the company needed to enter the next phase of growth. A phase that should be led by a strong chief executive with a sales and marketing background.
With his Unilever background, Andarakis was the first and only choice. And he wasted no time slashing distribution costs by 30% and raising production capacities by 20%. His ‘555’ strategy appeared over ambitious – to deliver US$500m of sales within five years from five brands.
So far, after just year two, it is well on course, with revenues of US$360m. Profits have risen by 28%.
All of which means that Aujan is now being geared for a stock market listing next year in Saudi Arabia. Adel Aujan’s role will change from being an owner to an investor. All the shots will be called by the “outsider” Andarakis.
The Aujan experience is a brilliant example of what can be achieved by putting in place the right person at the right time, particularly when looking for a stock market flotation. Andarakis's arrival was greeted by some at Aujan with displeasure: After all, who is this Greek immigrant wandering into our company telling us how to run it? And why should we bother listening to him?
Two years on, and with a likely US$1bn plus valuation when the company floats on the Saudi stock exchange, few - if any - staff at Aujan could possible harbour misgivings over the arrival of the “outsider.”||**||Flying to new lows|~||~||~|If you thought it couldn’t get worse, it has. I am, of course, talking about Airbus. Last week, CEO Christian Streiff resigned, just three months into the job. Earlier this year, co-chief executives Gustav Humbert and Noel Forgeard were shown the door.
Airbus's new A380 superjumbos are now running over two years late, and the company faces financial ruin after having to pay customers – including Emirates Airline – millions of dollars in compensation.
The big question is can it really get any worse? Before Streiff left, he argued that a US$3bn annual cost cutting plan was needed. Overheads needed to be reduced by 30% and production levels increased by 20%. Many of its 16 European plants may have to be shut and moved to facilities in India, China and Russia. Not to mention, thousands of jobs will be axed.
Sadly, as Ford found out, this is the only way forward. So why did Streiff quit? Could it be because parent company EADS wouldn’t implement this drastic plan? ||**||Crazy days are back|~||~||~|Over six years ago, the world went dot.com crazy. Adding the words dot.com to the name of your business and then floating it on any stock exchange, no matter how absurd the business plan, was a guaranteed way to make millions. And many people did.
But I fear we are now returning to those crazy days. Last week Google paid US$1.65bn for video website YouTube, a deal which made its young founders Chad Hurley and Steven Chen very wealthy men.
Now, I know that 100 million videos are watched on this site every day. And that’s about it. It is no secret that the site is full of unauthorised clips from music videos, films and television programmes. How or when these copyright issues will be resolved, no-one knows. Until then, any valuation for the company is bound to be flawed.
The common joke in the industry is that nobody bothered suing YouTube because it had no money to pay out. Which makes US$1.65bn a crazy price.||**||