Coca-Cola Co said on Thursday Chief Operating Officer Muhtar Kent will succeed Neville Isdell as chief executive of the world's largest soft drink company on July 1, 2008.
Isdell, 64, who was brought out of retirement in 2004 to lead a turnaround at Coke, will remain chairman until the company's annual shareholder meeting in April 2009.
Kent, who will remain president of the Atlanta-based company, helped orchestrate the acquisition of vitamin-water maker Glaceau earlier this year, and is given credit for Coke's strong volume and double-digit earnings growth so far this year.
We don't expect major strategic changes as Kent has been a major driver in the notable shift in the company's strategic direction, Citigroup analyst Bonnie Herzog said, citing the company's recent willingness to venture outside its own brands for growth with the acquisitions of Glaceau and Fuze.
Kent, 55, was born in the United States but has dual citizenship with Turkey, has been the clear heir apparent for more than a year, according to John Sicher, editor and publisher of industry newsletter Beverage Digest.
It makes perfect sense. Kent is very highly regarded throughout the Coke system and has virtually spent his life preparing for this job, Sicher said. It's also a positive having Isdell stay on as chairman because it will make for a very good and smooth transition.
Sicher said the company has two challenges ahead: to keep the international business growing and to turn around the business in North America.
Both are at the top of Kent's priority list, Sicher said.
Coca-Cola, like PepsiCo Inc (PEP.N: Quote, Profile, Research), has suffered a domestic slowdown in sales of its traditional soft drinks as health-conscious consumers opt for bottled water or tea, which they view as healthier. Strength in emerging markets, such as Russia, India and China, has helped offset this weakness.
Kent joined Coca-Cola in 1978 and held a variety of marketing and operational roles leading to his appointment as president of the East-Central European Division in 1989. He worked closely with Isdell in this role and supervised the relaunch of Coca-Cola throughout East-Central Europe.
He later became managing director of Coca-Cola Amatil-Europe, part of Australia-based Coca-Cola Amatil Ltd (CCL.AX: Quote, Profile, Research) a regional bottler based in Sydney. But he left the bottler after a 1996 short-selling incident.
Kent's financial adviser sold short 100,000 shares of Amatil on Kent's behalf just hours before the company issued a profit warning in November 1996. Short-sellers typically borrow shares and sell them, betting the price will fall, so they will be able to buy back the shares to repay the lender at a lower price.
Australian securities regulators investigated the incident, declined criminal prosecution and struck a civil settlement with Kent, who relinquished his profit from the transaction and paid a fine.
Kent returned to Coke in May 2005 as president of the North Asia, Eurasia and Middle East Group. He was named president of Coca-Cola International in January 2006 and appointed president and chief operating officer in December 2006.
At that time, Isdell said he and the board were satisfied that the short-selling incident, which resulted in a A$324,000 profit for Kent, was the result of an honest mistake.
Under Isdell's watch, Coke has introduced Coke Zero, its most notable brand launch in many years, and acquired Glaceau. It also has smoothed over relationships with bottlers and launched a new marketing campaign.
Coke shares were down 28 cents, or 0.4 percent, at $62.77 on the New York Stock Exchange.