THE FRIDAY INTERVIEW/Tony O'Brien, former chairman of C&C:IT WAS A warm and humid on the day Tony O'Brien (73) agreed to meet in a Dublin hotel to be interviewed about his long career at the top echelon of Irish business. "Good cider weather," he said soon after we met.
This week he stood down as chairman of C&C plc, a position he took up in January 2002, after an extraordinary 21 years as the group’s chief executive. The group has grown from a soft drinks business that sold into the Irish market only, to an alcoholic and non-alcoholic drinks business that sells in the UK and Ireland and is looking to expand further. Cider is at the core of what it does.
“Success for Magners in the UK this summer is fairly vital for us,” he said. The weather is good, the World Cup has been on and he is feeling optimistic, but any worries he has, he passes on now.
“I’m the last of the Mohicans,” he says, reflecting back on a lengthy career where he was accompanied in the business world by other long-timers such as Richard Burrows of Irish Distillers. He is the last of his generation to be “hanging up my briefcase”.
As well as C&C, he has also served as chairman of Anglo Irish Bank, as a non-executive director of CRH and as president of Ibec. He is currently chairman of the Review Group on Higher Remuneration in the Public Sector.
C&C, formerly Cantrell & Cochrane, is a truly old Irish business. It was formed in 1852, became a partnership in the 1870s and was bought by Guinness and Allied Domecq in 1968.
An accountant by training, O’Brien worked in a number of other companies including Erin Foods before moving to Cantrell & Cochrane and becoming its chief executive. He could have had a good life, running a £2 million business, earning an good income. So why the drive to grow and develop?
“What I find is that if your aspirations are not beyond these shores, then really what you are looking for is to be taken over by some multinational that wants a spot in Ireland. A lot of Irish SMEs have that aspiration in mind. They develop a nice niche business here and hope someone will buy them. It is a limited horizon.”
He spent 14 years on the board of CRH, and has huge admiration for the way it has spread its tentacles around the world. The Kerry Group is another Irish success story he hugely admires. “It is a great shame there are not enough Irish multinationals. I always wanted to be the next Kerry Group. And we might be in time.”
He speaks with admiration of young Irish business executives seeking to develop Irish companies in places such as China. Ireland, in his view, needs to begin educating its young people in such languages as Chinese, Hindi and Japanese, “otherwise the children will be let down the way my generation was in terms of language”.
O’Brien was involved in one of Ireland’s first management buyouts: “It was great fun.” The first steps in the move was to get his owners, Guinness and Allied Domecq, off the pitch. Guinness went first, then a year later he made a pitch to the board of Allied. He was a director at the time and the pitch ran the risk of getting him fired for disloyalty. However he made a “shareholder friendly” pitch and the board went for it.
The effort to then float the business took three runs and almost didn’t make it. The first run was hit by the collapse of the rouble, the second by currency troubles in South America, “factors outside our control”. The third time they made it, but it was close. “That was six years ago last month.”
But the most audacious move in his career, he says, was his bid for Irish Distillers. He was mad “for expansion” at the time. Irish Distillers was going nowhere, with Irish whiskey being “murdered internationally by Scotch”. He thought the product needed a route to market internationally and believed his then parents, Guinness and Allied Domecq, could provide that.
Because he had been told the Government would not be happy with Guinness being involved in a takeover, he came up with the idea of making a joint bid with Gibneys, with a view to splitting the brands between them afterwards.
Ireland in the late 1980s though was a lot different to the Ireland of today. Gibneys was owned by Grand Met and the unsolicited takeover bid was “construed by Irish Distillers as the Brits taking over Irish whiskey”. There were “Keep the Spirit Irish” banners outside every church gate in Ireland. “This was green flag stuff, like never before. At the time there was a kind of nationalism still in the country, in business as much as anywhere else. All that old rubbish. How the world has changed.”
For months on end, he had to devote time to addressing political gatherings and to being subjected to abuse. In the end, Irish Distillers was bought by Pernod Richard, and Irish whiskey went on to become a huge success internationally.
O’Brien feels that success vindicates his effort. “The political sector was blinded by patriotism or something, but it took a toll out of my life I can tell you.”
His satisfaction with the remaking of the public’s attitude towards cider is evident. The drink had long been “unfairly” portrayed as the source of social problems, a drink for park benches. A long public relations campaign that capitalised on it being a natural drink, with an attractive taste and thirst-quenching qualities, and being a drink that could be poured over ice, led to an eventual growth in market share of the beer or long alcoholic drink sector.
“It took 10 years in total, but we got up to 12 per cent of the beer market, comparable to Carlsberg or Heineken.”
The group also began to buy up other brands, including international ones. It bought Tullamore Dew from Irish Distillers, with O’Brien having to convince Burrows of the logic of the move.
Then they set their sights on the UK market, the largest cider market in the world. Again it was a long, well-funded campaign. They bought other brands so as to earn clout in the market. There was a large cider market in the UK, but it was cheap cider with low margins. C&C sought to create a premium market for its Magners brand, building up towards a summer 2006 national launch.
“There was huge fanfare, a huge spend. We had the World Cup, blistering heat, the thing took off like you cannot imagine.” Such was its success that the cider ran out. “So we decided, in our lack of wisdom as it transpired, to double capacity immediately. We spent a couple of hundred million.”
But the following summer was atrocious, with floods sweeping England, and its competitors had by then woken up to the threat. There was no World Cup, no novelty factor. “Magners nose-dived and we had egg all over our face.”
One of the mistakes the company made was that it ploughed money into an advertising campaign that boosted the image of cider generally, without necessarily making people want to drink Magners. The fightback has been going on for the past few years and this year’s performance is “fairly vital for us”.
Meanwhile, expensive explorations continue in such places as Spain and Germany to see if a new cider market can be created. “The international development of cider will be important for us going forward.”
Given its small size, O’Brien believes the only strategy for the Irish economy is to be competitive and await growth in larger economies such as the US. He believes the Irish workforce is educated and responsive and that, after a few tough years, the country will rise again.
ON THE RECORD
Name: Tony O'Brien.
Age: 73.
Position: He has just stood down as chairman of C&C. He is one of the most senior figures of his generation in Irish business.
Family: Married to Frances and they have one son, Shane.
Something you might expect: When he is out and being seen, he drinks cider.
Something you might not expect: When he is at home he'll drink French wine, preferably Chablis or Pouilly Fumé.
