Digitalization is an opportunity for our company. A new governance group with a mission to increase the competency of the board – and a digital review of all processes. Those are two major focus areas for Fredrik Spendrup, CEO of the market leading Swedish brewery Spendrups.
“We need more people on our board with experience of leadership and digitalization”, he says when we meet in June 2019,
The brewery industry in Sweden is undergoing rapid change. One change is the increasing number of competing microbreweries, another is foreign breweries investing in Sweden. But the big change is of course the digitalization. Fredrik Spendrup sees it as an opportunity for Spendrups, rather than a threat.
“We’ve always been good at adjusting to new conditions on the market. So for us, this is an opportunity.”
At Spendrups, the digital revolution started long ago. Norrlands Guld is one of the company’s biggest brands, and its target group is men aged 25-30.
“This group stopped watching tv ten years ago. A few years after that, we realized that urban women in the same age group didn’t watch tv either. So how do we reach them?”
For Spendrups, it has meant shifting focus in marketing, from tv to social media.
“Marketing is changing at a tremendous pace today in respect to reaching consumers”, Fredrik Spendrup says.
To further increase the speed of digitalization in the company, Fredrik Spendrup has just initiated a new business unit which will scrutinize every process in Spendrups – and, if there are savings to be made, the processes will be revamped.
The task is to find business cases where we can save money by digitalizing our processes. Every process will be looked into, asking: if we were to create this process from scratch today, given the platforms available at the market – what would the process look like?”
The business unit shall be self-financed and Fredrik Spendrup thinks there are some low hanging fruits to be picked. The task is not only to save money, but also to find new revenue streams.
“I think we can do quite a lot in financial controlling, logistics and planning. But we’ve already rationalized a lot in our CRM systems, orders and e-commerce.”
The aim is to achieve € 3-4 million in annual savings or new revenue.
“It will require investment. We might have to invest €2 million to get €4 million back”, Fredrik Spendrup says.
Spendrups is a family owned company founded in 1897, now run by the fourth generation of entrepreneurs. The annual revenue is approximately €350 million and the number of employees just under 1.000. We meet CEO Fredrik Spendrup in the head office in Vårby outside Stockholm. The lobby is filled with bottles and cans – beer, water, soda, posters for wine and a fridge full of their latest product: the energy drink Naia.
Fredrik Spendrup succeeded his father, Jens Spendrup, as CEO in 2011. During his eight years as a CEO, the company has seen an increase in operating margin – from 7-8 percent to 15 percent. Spendrups sells more premium products today, but the growth in sales has been modest.
“Our growth is an average of 2 percent. If we want to increase our turn-over in 50 percent in ten years, it will not come from Sweden. Where’s that growth going to come from? Swedes won’t start drinking that much more. And the country’s population won’t grow 50 percent.”
Fredrik Spendrup continues:
“We have three demarcations in how we define ourselves. One is that we’re a brewery. Another is that we’re Swedish, and the third is that we’re family owned. Which of these can we challenge?”
Need bigger goals
This year, Fredrik Spendrup has initiated a new governance group. One of the tasks for the group is to set new goals for Spendrups.
“We need big, hairy and audacious goals!” Fredrik Spendrup says. “Historically, we’ve always had big goals. First, we aimed to keep our position as third in the market. Then, our goal was to become bigger than Falcon [Swedish brewery, now owned by Carlsberg brewery, editor’s note]. After that, we said: What if we could grow bigger than Carlsberg? Today, we are bigger. So, what’s our next vision? We are working on that at the moment.”
Many family members on the board
Being CEO as well as a member of the owner family means that Fredrik Spendrup has dual roles in the company. And he’s not the only family member involved in the family business. Four family members sit on the board of directors, and two are substitutes but still attend the meetings.
“We have many owners in the boardroom”, Fredrik Spendrup states.
To change this, he has initiated a transformation of the board of directors, aiming to increase the competency of the board.
“Other Swedish owner families, such as Wallenberg and Bonnier, have clear prerequisites before a family member joins the board”, Fredrik Spendrup explains. “They require a certain level of experience or education. We have chosen not to. On the other hand, we have decided that the number of owners on the board should not exceed 50 per cent.”
New chairman to take on board
Leading the board with a high number of owners can sometimes be a challenge. Spendrups’ new chairman, Otto Drakenberg, has extensive experience of the industry and is a seasoned corporate leader.
“He has a tremendous drive. It can be difficult for a chairman to give feedback to owners, but Otto doesn’t shy away.”
In control of the ongoing change of the board is the new governance group that the owners’ council has founded. Apart from Fredrik Spendrup himself, the group includes his cousin Sara Spendrup-Dyer, the inhouse lawyer, a strategic manager and the chairman of the owners’ council.
The owner’s council consists of the family members that own Spendrups, but it has so far not been very active.The idea is to make it more active, to create an arena where family members can still access company information while not being on the board of directors.
“We can meet the owners’ council frequently and do mini seminars where we discuss sales strategies, production strategies and owner strategy”, Fredrik Spendrup suggests.
“Avoid specialists on the board”
If family members will move out from the board – what competency should replace them? Fredrik Spendrup is quite clear on what he wants: board members with experience in digitalization, or more specifically experience of leadership in digital transformation. Previously, Spendrup has tried putting digital specialists to the board. That did not work out as well as expected.
“I believe you should be careful with specialists on the board. You need people who understand your business. It’s better to have generalists that can cover different areas of expertise and experience”, he says.
Currently Spendrups is also looking for someone financially savvy, probably a CFO, to join the board. Board members with industry experience is a priority.
“But most of all we need someone with intrinsic knowledge of and a leader’s perspective on how other companies have done the journey of digitalization. This person is more difficult to find than a CFO”, Fredrik Spendrup concludes.
Deep partnership brings clients closer
Back on the topic of future, Fredrik Spendrup discusses the roads he sees ahead: internationalisation is one of them, services another. Fredrik Spendrup identifies that Spendrups could do more, much more in services – based on digitalization.
“Basically, we could offer software for resource planning to the restaurants that purchase our products. Perhaps we should develop software. There are apps today where you can order your food in a restaurant using an app, and pay with your credit card in the app. That’s the sort of service we could create and provide to our clients”, he says.
These ideas a part of a business strategy where Spendrups wants to become more important to its clients – by getting closer.
“It’s tricky to change supplier, you need to change a lot of technology to do the transition. But it’s still fairly smooth. Changing business partner, on the other hand, when a partnership runs deep – that’s much more difficult. We would become more important to our clients.”
Getting closer to clients is a direction that Fredrik Spendrup wants to take – but he’s not yet sure what the next step is.
“There is a huge demand on the market today for well packaged services, and Spendrups could provide these. It’s a journey we have just begun.”