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By Mike Ramey

Cott Corp of Canada today revealed plans for a major shake-up designed to take the company back to its roots as the world’s biggest producer of retailer brand beverages, and return the struggling business to profitability.

The President of Cott’s North American business unit and its 'Chief People Officer' will leave the company, and their responsibilities will be shared among other senior executives. Various executive posts throughout the organisation will also be eliminated, in some cases by not filling existing vacancies.

Cott estimates that total severance costs will amount to $6-$8 million. Overall, the company plans to cut selling, general and administrative (SG&A) costs by more than 10% or $20-$22 million per year.

The total annual savings, including headcount reductions and “manufacturing and supply chain optimisation,” is expected to be $39-$43 million. More than $10 million of these savings will be achieved in the second half of this year.

The recovery plan has been drawn up by Interim Chief Executive David Gibbons, a Cott Director who stepped in to run the company on a caretaker basis following the departure of CEO Brent Willis in March.

Gibbons believes that, under Willis, Cott diverted too much of its energy and resources away from its core retailer customers, as it launched its own portfolio of branded beverages. He has pledged to refocus the company on retailer brand beverages, particularly in its key US market.

Change of course “We will change course,” Gibbons said in a formal statement announcing the shake-up. “Through these efforts, we will continue to reposition Cott to play a greater role as a champion of private label.

“Our role is not to invent new categories. Our role is to be ‘fast followers,’ to leverage the growth of expanding categories, and to improve profitability for our retail partners at lower prices to consumers.”

Gibbons added that Cott was already concentrating its marketing efforts on the needs and requests of its retailer partners: “This will be our focus. Our existing retail partners will drive our new product development.”

Cott simultaneously announced changes in its Board of Directors, following the acquisition of an 8.7% stake in the company by the New York-based hedge fund Crescendo Partners in May.

The Board has been increased from ten to 11 members with the addition of four new Directors: Eric Rosenfeld, Greg Monahan, Mark Benadiba and Mario Pilozzi. Three former Directors have meanwhile stepped down: Frank Weise (a former CEO and Chairman of Cott), Don Watt and Serge Gouin.

Gibbons has been appointed Chairman of the Board, and is leading a committee of Directors in the search for a new permanent CEO for Cott.