Profile of a public company in Florida
Private label beverage company Cott Corp is back from the brink. Now what?
Willis says Cott began developing its own line of low-price drinks — “control brands” — that stores could sell exclusively. One was a sports drink called GL-7; another was a tea called Orient Emporium. Cott even tested vitamin-enriched water for dogs that came in flavors such as peanut butter.
Willis also tried to make over Cott’s staid corporate culture. He says he hired 50 top-level managers and consolidated management offices in Tampa. He opened a less expensive 60,000-sq.-ft. headquarters in 2008 with painted murals, no cubicle walls, foosball and table tennis and a meeting room shaped like a can. “I just tried to get the company to be more open and candid,” he says.
Willis’ strategy quickly hit turbulence. The move into Cott-branded teas and juices required agreements with new distributors. Walmart, however, demanded exclusive distribution agreements — no additional middlemen — with its suppliers. At one point, Walmart, which accounted for almost 40% of Cott’s sales at the time, cut shelf space for Cott beverages and ended its exclusive supplier agreement.
“That almost killed the company. They lost their way,” says Sheppard, the former CEO.
Cott’s moves also coincided with a price war between Coca-Cola and Pepsico and a worldwide rise in the cost of commodities that ate up Cott’s margins.
Cott endured a string of six unprofitable quarters. By the time its stock price had fallen from $15 to below $2 a share in March 2008, Willis was out, less than two years after he was hired.
Willis blames timing; others fault the strategy. “I’m sure I tried to do too much too soon,” Willis says, blaming a “failure to communicate” his strategies. He now runs multiple businesses, including Liberty Ammunition, a lead-free ammunition company in Clearwater.
Beverage Business Insights editor Gerry Khermouch says Willis “was doing that ‘we’re a high-tech, free-wheeling gang of entrepreneurs’ thing. He really put his heart into it. Unfortunately, Cott is not that kind of company.”
After Willis left, private equity firm Crescendo Partners bought 7.5% of the company’s shares, earning four seats on the board that it still has today. But profits were still hard to come by. At the end of 2008, the New York Stock Exchange threatened to delist the company when its share price sank below $1.
Jerry Fowden took over as CEO in 2009. He helped revive the company, analysts say, by refocusing on Cott’s traditional private label drinks and rebuilding the company’s relationship with Walmart. [Photo: AP- Frank Gunn]
The next year, Cott picked a new CEO: British-born Jerry Fowden, who had overseen the company’s international division. Fowden refocused the company on its core business — traditional private label drinks — and rebuilt the company’s relationship with Walmart, analysts say.