Jack Keenan: Keen to impress

Jack Keenan has proved a tour de force in the drinks trade, making a big impact in a comparatively short time. Patrick Schmitt discovers for himself why the industry should be so thankful for Jack’s decision to take on spirits.

It’s fairly common, particularly at the moment, to celebrate the makers of drinks and then criticise the managers. This is doubtless to emphasise a simple message: you must be seriously inept to make a mess of something that is magnificent to consume. But there are operations that owe just as much to their top execs as their producers, and consequently there are people who should be recognised and applauded for what they have achieved in business, just as the great winemakers and distillers are rewarded for the flavours they create.

And if there’s a glaring example of a manager deserving commendation, it’s Jack Keenan. A New York native and Suffolk-based chairman and consultant in his late 70s, Keenan may have spent just 18 years in drinks, but the industry has been lucky to have him at all. Moving from the US to the UK in 1996, he was drawn to England – and alcohol – by a prestigious post: CEO at International Distillers and Vintners, better known as IDV, and globally renowned as the owner of Smirnoff, J&B, Baileys and Bombay Sapphire among others.

Keenan was formerly CEO of Kraft General Foods International and chairman of its successor company Kraft International. Although based in New York for these roles, he spent five years in Brussels when he was president of General Foods Europe (1982-1987). He travelled to England on many weekends for theatre, wine auctions, racing at Royal Ascot and Cheltenham, and to begin his love affair with cricket.

Having developed a deep affection for both the diverse culture of the continent and a London lifestyle, Jack and his wife began thinking of Europe as an eventual destination. In January 1996 Jack was approached for a CEO role at Grand Metropolitan. The headhunter said that the only drawback was that the job was in London. Having looked at Grand Met as a possible acquisition candidate when he ran M&A for General Foods, he realised that it had to be IDV. He took the next Concorde flight from New York to London, returning home with a five year contract to lead the company as CEO.

“I had followed the trends in the drinks industry for personal entertainment”, he says speaking modestly of his preparation for the role at IDV, a position which required his leadership in such pivotal moments as the merger of IDV with United Distillers in the process of forming Diageo, and also the acquisition of Seagram by creating a deal with Pernod Ricard to take on Seagram brands that would create anti-trust or other issues, such as a Cognac conflict with LVMH.

Breaking the mould

Despite such achievements, Keenan is the antithesis of the stereotypical broad-shouldered, tough-talking CEO. Speaking softly and smiling broadly, he seems at great ease talking about his life, taking pleasure sharing tales from a career in drinks and food, although he also appears happy to listen to others, his eyes narrowing behind round spectacles as he draws in the information.
Interestingly, Keenan describes himself as “custom made” for the drinks trade. Indeed, Keenan was born into an FMCG world with his father a regional VP of Kellogg’s cereals. After university he worked initially for Colgate Palmolive and Leo Burnett Advertising. He then did two years at Harvard Business School and received his MBA. By the end of 1963 he was in product management at General Foods and working his way up as general manager of several business units, then senior VP in charge of corporate strategy, corporate NPD, and M&A.

While his aforementioned five-year stint in Brussels gave him the chance to build a world-class wine cellar, it was his “Mad Men” days that engendered a lifelong love of gin martinis, which in turn fuelled his interest in branded spirits. These days Keenan has one martini per month, and carefully plans which bar he will visit for his Tanqueray 10, extra dry martini.

But Keenan adds that he takes just as much pleasure following strategies in the industry as in consuming industry products. Indeed, testament to Keenan’s inherent urge to learn about complex subjects in great detail is his knowledge not only of the spirits business, but also of the world’s most complicated wine region, Burgundy, and most complicated sport, cricket. Then there is his remarkable ability to recall facts. “I was told that I had a photographic memory when I first joined IDV… I think that people were impressed that I had absorbed all of the figures about the business in the first three months.” He admits, however, to a certain slowing down from time to time.

Supervising and strategy

Another aspect to Keenan’s character that enhances his suitability for the drinks trade is a keenness to mentor talent. “I enjoy building teams of bright young people,” he says. Indeed, one of his protégées at UDV was Ivan Menezes, now CEO at Diageo. Then there’s his skilled strategic approach.

Looking back to the Seagram acquisition, he says that Morgan Stanley advised Diageo not to bid for the business because Diageo already had too great a share in certain spirits categories. “But I said, ‘we can if we find a partner’.” Despite the fact Pernod Ricard was suing Diageo at that time in Japan, the US and Brazil over Wild Turkey distribution rights, Keenan decided to approach them. “I knew it was going to be messy but for many reasons I thought Pernod would be the ideal partner,” he recalls.

Having called Thierry Jacquillat, Pernod’s director general, to discuss the partnership, Jacquillat’s initial response was “C’est une blague? [It’s a joke]”, or as Thierry remembers in his autobiography, “Êtes-vous serieux? [Are you serious?]” Nevertheless, the two companies managed to surprise the City by jointly and successfully bidding for Seagram, and Keenan says that Pernod did “a great job with the brands they got”, stressing in particular the “terrific” performance of Jacquillat, “who seems to have been written out of Pernod’s history”.

Unfinished business

Since retiring from his full time post as executive director at Diageo in 2001, Keenan set up his own company called Grand Cru Consulting, “before discovering the wonderful world of private equity with Oaktree Capital”. This has catapulted Keenan back into “business strategy, which I love,” as chairman of the Stock Spirits Group, created in 2006 after Oaktree acquired Polish vodka producer Polmos Lublin and merged it with Eckes & Stock from the Czech Republic two years later. Keenan reports with pride that when Stock floated on October 2013 at £2.35 per share its value quickly rose to £3. “I am excited by the future of Stock,” he states. Speaking generally about his business techniques, Keenan says, “My approach is to build a preclusive strategy because it allows you to grow without competitive retaliation.”

He’s also talks about the importance of “backing your winners” and having a “ruthless focus”, which extends to both products and markets. “The key is to know where you make your money,” he says, stressing the need to concentrate on the brands and countries that produce the majority of revenue – an approach he was surprised to find lacking when he first arrived in the drinks industry. But looking back to his days at the helm of IDV and then UDV, does Keenan have any regrets? “I wish I’d done more to begin the China experience sooner,” he concedes, adding that his view of the market was “coloured” by his early and difficult forays into the country at General Foods. On the other hand, he says that the US is an “amazing market” and “the purchase of Seagram was so instrumental in giving Diageo the scale to go to this market more efficiently.”

As for his approach to building brands, he says he would do the same things today as he did almost 20 years ago, and that is to focus on selective distribution of premium brands in the on-trade and targeting opinion leaders. “The method would be identical, but the tools, with social media, would be different,” he says. Stressing the importance of a “selective atmosphere” for creating a word-of-mouth buzz around spirits brands, he uses Absolut Vodka as an example. “Its success in the US stemmed from its decision to target gay bars in Manhattan; today that would be supplanted by gay social media,” he says. However, one development Keenan has noticed that marks a particular contrast to his early days in drinks is the rise of craft spirits. “It is staggering today to walk into trendy restaurants and bars and find so many spirits that I don’t recognise,” he says. “It is following the craft beer trend, and it is a big change,” he continues, adding, “but I’m not sure it is a big challenge for the majors, because these craft spirits don’t have the scale.”

Envious eye

Aside from Tanqueray 10 – Keenan’s ideal base for martini – brands that currently elicit his admiration, but are also outside his control, include Bombay Sapphire, now in Bacardi’s portfolio. “We shouldn’t have had to sell Bombay Sapphire when we merged with Guinness,” he says regretfully, “And the secret to Bombay’s success was that it talked botanicals, but it had almost no juniper”. He also mentions his respect for Hendrick’s Gin, owned and controlled by William Grant & Sons, but adds, “It did take Grants 10 years to build it.” As for surprises? “I didn’t have much hope for the idea of a vodka made with freeze-dried grapes, Cîroc that is, until Puff Daddy got involved,” he says. “But I like to think that you don’t have to give half your brand to a celebrity for it to succeed,” he adds, critically. For the future, Keenan is backing, as one would expect, a drink under his own management at Stock: Count Keglevich vodka, which he says has a great brand story rooted in a central European noble family by the same name. And what about wine? Keenan has evidently always been a savvy buyer, and recalls discovering Le Pin at a French restaurant and then purchasing a case in Germany before even Robert Parker had given it a glowing rating. Once its reputation was assured, causing its value to rise significantly, Keenan says he swapped six bottles of Le Pin ‘82 for 13 cases of Léoville Las Cases. He also says that his fine wine interest was used to convince the Grand Met management of his suitability to lead a drinks company. On his introduction to the “fabulous board”, Keenan recalls Grand Met chairman Sir George Bull telling the assembled executives that their new recruit had “a much better cellar than anyone present”.

The grape and the grain

Today Keenan’s desert island drink is Burgundy, red and white. “I’m a great Ponsot fan,” he says, and, alluding to the extent and quality of his Burgundy collection, he says he’s regularly asked to sell back stock to London wine merchants. “I’ve told them not to touch it,” he states. However, he is “selling off some Champagne” that he thought he would drink hosting friends at his house in Suffolk, but hasn’t because “the majority of our entertaining is done in restaurants in London”. He’s also hoping to pass on his Sauternes, “which is turning nicely brown in my cellar.” Somewhat surprisingly, he’s never purchased a wine company, although says he came close to acquiring Jaboulet, owner of the famous Hermitage La Chapelle, for a client following his retirement from Diageo. “I never bought vineyards or wine companies when I was at IDV,” he states. On the other hand, he adds, “But I did sell Glen Ellen, because it destroyed economic value.”

For a relatively brief career in drinks Keenan has witnessed, indeed engineered, enormous change in spirits, while indulging his passion for wine outside the boardroom. Unfortunately, many of his best stories must remain out of print, not to protect himself, but his colleagues still in the business. But if you do manage to share a bottle of Burgundy with this sharp-witted, softly-spoken and UK-residing American – preferably at his box at Lord’s cricket ground – make sure you ask him about his deal brokering Russian vodka, a tinned sweetcorn transaction with a French luxury goods manufacturer, or mixing instant coffee with a Master of Wine. Keenan, it seems, has dealt with all the famous figures in the drinks industry at some point in his career, and thanks to his remarkable memory, he can recall all the details.

Jack Keenan’s career in drinks

• March 1996: retires as chairman of Kraft Foods International to join Grand Met’s board as executive director and CEO of International Distillers & Vintners.
• July 1996: begins discussions with Grand Met executives about merging IDV with either Seagram or Guinness.
• April 1997: Guinness agrees in principle to a merger of equals with Grand Met.
• December 1997: regulators approve the merger after the sale of Dewar’s whiskey and Bombay Sapphire gin to Bacardi in order to solve anti-trust issues raised in EU (Dewar’s) and US (Dewar’s and Bombay Sapphire).
• January 1998: the merged drinks business becomes United Distillers & Vintners with Keenan as CEO and Ivan Menezes in charge of the integration process.
• March 2000: seeks approval from Diageo management to join the auction for the Seagram global spirits and wine business. Seagram expresses concerns about Diageo anti-trust issues.
• June 2000: Keenan makes a phone call to Thierry Jacquillat the PDG of Pernod Ricard in order to create the partnership that will solve the anti-trust issues.
• March Quarter 2001: Seagram is acquired by Diageo and brands with anti-trust issues or other conflicts are sold to Pernod at pre-agreed prices.
• June Quarter 2001: Seagram is integrated into UDV and plans are made to add Guinness Brewing into what was briefly named Guinness UDV, but would become Diageo when Pillsbury and Burger King were sold.
  October 2001: Keenan reaches his 65th birthday and has to retire.
• November 2001: Keenan forms Grand Cru Consulting and announces several global drinks companies as clients.
• April 2008: Oaktree Capital Management hires Keenan to chair the Stock Spirits Group.
• October 2013: Stock Spirits launches an IPO and joins the FTSE. Keenan named independent non-executive chairman.

This interview first appeared in the December 2014 edition of the drinks business