In Kraft veteran Rick Lenny, Hershey picks up a new CEO -- and, eventually, chairman -- that the company hopes will ably steer its powerful domestic brand into the 21st century. Philip Morris, meanwhile, which bought Nabisco Holdings last year, has now seen three top-ranking Nabisco execs leave for other high-profile posts.
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Rick Lenny has two reasons to party this week. First, his alma mater, Georgia State University, has played its way into the NCAA men's basketball tournament. Second -- and of only slightly higher importance -- he was yesterday named president and CEO of Hershey Foods Corp. (NYSE: HSY). Lenny comes to Hershey from Philip Morris (NYSE: MO), where he was most recently head of Kraft's biscuit and snack operation. The hire is a strong move for Hershey, which needed new blood to fire up the company since Chairman and CEO Ken Wolfe plans to retire. (Wolfe will stay on as chairman for no more than a year, then pass the seat on to Lenny.) In selecting an experienced foods executive from outside the Hershey fold, the company may have bucked tradition, as many of its top people are longtime employees. But Hershey also found a worthy leader with plenty of experience developing brands. Lenny's challenge is clear. He's taking command of an invaluable domestic franchise, but one that may need to be creative in order to spur significant new growth. Hershey's market position is strong domestically, but it's chocolate doesn't traffic well overseas, and it will likely look to acquire other confections in higher-growth areas. As we noted in a January story, the company recently bought Nabisco's intense mint and gum business, which is expected to turn in relatively small revenues this year -- but higher growth than Hershey's core operations. It's in many ways similar to what investors have seen in the drinks business, where PepsiCo (NYSE: PEP) and Coca-Cola (NYSE: KO) are aggressively targeting non-carbonated growth opportunities -- often by acquiring successful, smaller brands and then applying their own distribution, marketing, and manufacturing mettle. (For more on investing in consumer brands, check out our InDepth page on the subject.) Increasing operating efficiency and boosting earnings by repurchasing shares has served Hershey well. However, the company may have greater ambitions as it seeks to continue growing market share against the likes of Tootsie Roll (NYSE: TR), Wrigley (NYSE: WWY), and Mars. Kraft, meanwhile, has issues of its own. Lenny is the third high-ranking Nabisco executive to leave in recent months. Nabisco was swallowed up by Kraft, already the domestic numero uno, in a bid to challenge Nestle as the world's biggest food company. Mergers can mean opportunity for companies looking to snap up experienced executives unsure of where they'll fit with their acquirers. Lenny follows James Kilts, now CEO of Gillette (NYSE: G), and Edward Lyons, who became CFO of SAP's (NYSE: SAP) U.S. unit, to new pastures. Dave Marino-Nachison prefers Hershey's kisses with almonds, but he doesn't own shares of any of the companies mentioned in this story. The Motley Fool is investors writing for investors.
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