Darcy Davenport, CEO of BellRing Brands (NYSE:BRBR)
One of my ongoing research projects has been to identify outstanding business leaders BEFORE they are recognized as “outstanding” by mainstream investment community. While studying leaders who have delivered excellent business performance over extended periods of time is helps to improve pattern recognition, looking for high potential leaders is generally a more productive use of time and something I would like to increasingly focus going forward. This time I would like to highlight a CEO whom I would describe as a high potential business leader - Darcy Davenport, CEO of BellRing Brands.
So what makes Darcy Davenport a high potential CEO?
BellRing is a spinoff from Post Holdings, a CPG company founded by a well-known CEO-capital allocator Bill Stiritz, profiled in ‘The Outsiders’ book. BellRing was spun off in 2019 and has been an independent business since then.
While technically not a founder, Mrs Davenport acts like one. For example, she has spent substantial time and effort building corporate culture, a type of investment in human capital that typically pays off over many years (not something a short-term oriented CEO would do). Even company’s name comes from tradition to ring the bell at their HQ as a way to celebrate big and small successes. Davenport talks a lot about culture in her interviews and it seems this is something she genuinely cares a lot. On top of that there are other indirect signs showing that excellent culture at BellRing is a reality (for example, Glassdoor reviews, various articles as well as solid business performance since she became a CEO).
Another variable I pay attention to - track record. Between 2017, when Mrs Davenport became a President of Post’s active nutrition business (a predecessor of BellRing), and 2021, revenue increased from $713m to $1,247m (organically); operating profit went up from $65m to $168m while free cash flow tripled from $76m to $224m. You won’t find a lot of CEOs in their 40s with such a track record running a multi-billion consumer packaged goods company. Stock has followed fundementals - since IPO in Oct 2019 BRBR stock is up 50%.
To summarize: Darcy Davenport is
a young, yet experienced CEO with excellent track record;
has backing from one of the best capital allocators (Bill Stiritz); and
has mentality of a business founder.
Official bio from proxy filing:
Darcy Horn Davenport has served as our President and Chief Executive Officer since September 2019 and as a member of our Board of Directors since October 2019. Prior to our IPO, Ms. Davenport has served as President of Post’s active nutrition business since October 2017 and as President of Premier Nutrition since November 2016. Ms. Davenport previously served as General Manager of Premier Nutrition from October 2014 to November 2016 and Vice President of Marketing from October 2011 to October 2014. Prior to joining Premier Nutrition, Ms. Davenport served as Director of Brand Marketing at Joint Juice, Inc., a liquid dietary supplement manufacturer, from May 2009 to October 2011, when it combined with Premier Nutrition. Ms. Davenport has served as a member of the board of directors of Blentech Corporation, a company focusing on developing custom-made, food processing solutions including equipment, integrated systems and software, since January 2010. Ms. Davenport has experience in significant leadership positions, extensive experience in leadership roles in industries relevant to our business, an understanding of finance and financial reporting processes, experience in marketing and sales and experience as an executive with direct operational responsibilities. Age 48.
Below I picked some quotes from interviews which are supposed to give you a good color on Darcy Davenport and her leadership style:
Which brand has grown the most, and which are you hoping to give more attention to? Premier Protein is leading the category in growth, which is pretty exciting. The brand is growing at 50 percent from a revenue standpoint. (Aug 2017) [1]
Are you ever worried about any of the brands cannibalizing each other? They all share shelf space, but they all have distinct targets. Power Bar is a mainstream brand, but it’s focused toward today’s athletes. For Premier, it’s about people making healthier choices in their life, and they’re not necessarily athletes. We don’t see a lot of interaction between the brands. (Aug 2017) [1]
Competition in the space is accelerating — do you have any concerns? Keeping up with the trends will be one of the biggest challenges, and deciphering what is a trend and what is a fad. Last year we were looking into algae protein. We were seeing pockets around the country that there was some interest, but when we were looking into whether it was right for our brands, we decided our mainstream consumers weren’t ready. Plant Protein, however, we see as an ongoing trend. We just launched Plant Protein bars under Power Bar last month, and that’s where we see an opportunity for Power Bar to play there. (Aug 2017) [1]
What are the three biggest trends you have on your radar? Clean labels continue to be a push in transparency across the whole grocery store, so that will absolutely continue. Protein has been around — we call it the decade of protein — and we’ll see a lot more types of protein expand. Around obesity and the growing concern with diabetes, we’ll start to see more products go after kids with lower sugar.
Favorite product? Our Power Bars newborn, the plant protein bars. My favorite right now is the dark chocolate almond sea salt flavor. (Aug 2017) [1]
“The category is one of the highest growth categories in the grocery store, and I think what’s exciting is that consumers want to eat healthier — and they are,” she said. “We’re kind of at the center of the trend of healthier eating as well as convenience.” (Dec 2017) [2]
“There are many careers that people just automatically go to after Princeton — there’s investment banking, there’s consulting, there are people that go to law school and medical school. But it’s funny, I don’t think that CPG [consumer packaged goods] marketing is really ever even thought about. … I just kind of had to discover it myself. I would love to tell students at Princeton that there are other jobs out there that aren’t the typical [ones], and everybody has their own path of trying to find what they want to do in life.” (Dec 2017) [2]
Q: You step into the CEO role. How do you decide where to focus first? A: It sounds simple, but you have to start with truly understanding what the company does. Take our brand portfolio. We have five different brands that target different types of consumers: Premier Protein, PowerBar, Dymatize, Supreme Protein, and Joint Juice. It's a portfolio approach, but overall the goal is to help people make healthier decisions, or lose weight, or refuel after a workout, or as a healthy way to replace a meal.
So when I first started three years ago, a lot was going right. We had strong brands, great products, nutrition is a high growth category... but the biggest issue was with Premier Protein. We had high loyalty but limited distribution and fairly low awareness. So the first go was to expand distribution within channels and with retailers and to get more items on the shelf. That meant investing in new products, new pack sizes, new flavors... and we did a lot of work around effectively communicating with consumers and amplifying our marketing message.
Now my focus is very different. Now that we have the brands in a really good place, now that we have national distribution with basically every retailer that carries nutrition products... there's still upside, but now I'm more focused on our corporate infrastructure, on the right people, systems, etc to help us reach our goal of being the active nutrition category leader. So to answer your question (laughs): First, it's all about sales. Then you can work on other areas. (Feb 2018) [3]
No startup founder or new CEO comes to the job with every skill required to do the job. How did you bridge that gap? You're right. I started in finance and accounting and quickly realized that wasn't my passion -- but oddly enough it's incredibly helpful for what I do now. After a fortuitous conversation with a recruiter I realized I wanted to go into brand marketing. I have a passion for consumer insights, for consumer behavior, for solving problems for consumers... I realized that was the perfect career for me. My longest stop along the way was with Dreyer's Ice Cream, and not only did I learn to be a marketer, I saw for the first time how much impact a strong culture can have on a company's results. We had a wonderful culture there.
So what I now do is a combination of my finance background, of leaning in to my marketing side because at the end of the day we're a brand company... and also focusing on how to motivate and inspire our team of 150 people. My job now is to inspire and empower our employees to really reach their potential -- which is the very same thing we try to do for our customers. That's where I spend a ton of my time. Luckily, I had some experience with launching new products, partnering with operations, managing a P & L... so I was familiar enough in those areas that I could talk the talk. But at the end of the day, it's all about people, and building a strong team. (Feb 2018) [3]
You're a big believer in creating a purpose. Purpose is critical for every company. In our case we had a number of brands, mostly built through acquisition, and we had a good values system in place... but we aren't a founder-led company. I wasn't the entrepreneur that created these products. That's often where purpose comes from: The ideology of the original founder. What I felt we really needed was a higher purpose that unified our brands and provided a motivating north star to guide our employees.
Keep in mind that consumers are incredibly savvy. They see right through inauthenticity. But when you have a purpose, the entire company buys into, believes in, and is motivated by... consumers see that, too. That's one of the main building blocks of why we've been successful. Wanting to create a sense of purpose is one thing. Actually pulling it off is another. The process took five or six months. The reason it too so long is because I felt strongly that we needed to have everyone be part of the process. I didn't want it to be a top-down initiative. I wanted it to be bottom-up, a common goal, one that everyone had their fingerprints on. That takes time. It also helps that we have an incentive where if we get 10 percent above plan we have a year-end meeting in Hawaii, and at one of those meetings we had the entire company participate. We started with about five different options, really got into what makes this place magical, and incorporated the feedback and narrowed it down. (Feb 2018) [3]
Q: What did you end up with? A: "We bring good energy to the world." It's perfect, because everything we do can be guided by that. The products we launch, the acquisitions we make... it has to ladder up to that purpose. The way we treat our employees has to ladder up to that purpose. The way we treat our customers has to ladder up to that purpose. The way we treat our partners, our vendors... it's all guided by the idea of bringing good energy. If it doesn't bring good energy to the world -- or at least to our small piece of the world -- we don't do it. (Feb 2018) [3]
That's a lot like Herb Kelleher, the Southwest Airlines CEO. Whenever he has decisions to make, he asks, "Will this help us the low-cost provider?" Having a simple purpose makes decision-making a lot easier. It's critical that your purpose can be applied to all of your decisions. Does it provide the guardrails that will help guide you? That is absolutely critical. For us, "We bring good energy to the world" has helped us stay true to and build on the cultural foundations we already had. For example, we use it often in recruiting. There are a ton of very qualified and successful people who I would not categorize as "good energy." When you're a high growth company, keeping an effective culture alive when you're adding so many people from different companies, different cultures, etc... you need to have a very clear and deliberate north star. (Feb 2018) [3]
I'm sure you went into the job with certain assumptions. What turned out to be different about the job than you expected? I thought a CEO always has to have the right answer. I thought the CEO always had to be the center of attention. They're constantly making the calls, and that made me uncomfortable. I'm a really collaborative person. I don't have all the answers. I like doing the work; I don't like being the center of attention. Having been in this seat for over three years, the biggest thing I've learned is that there are many different ways to lead. There's power in actually not having all of the answers. There's a power in being quiet and having the people around you raise their game and express their full potential. Now I see my job as empowering everyone around me. It's not about me. It's about everyone else -- and creating an environment where everyone can thrive. It might sound cheesy but that really is how I look at my job. I'm a mother of two small kids, and that feels good to me. If I had to do the job the way I thought when I first started... I probably wouldn't still be doing it. (Feb 2018) [3]
Q: It’s interesting to me that your initial reaction was “no” and yet you were open to having your mind changed. That’s unusual. A: It’s unusual, but it happens a lot around here. One of the things I’m proud of is that this culture is not my culture. This is the company’s culture, and I always impress on people that it’s everyone’s responsibility to help create it, foster it, build it and make it a place where we all want to work.
I never pictured myself in the CEO role because I had preconceived notions of a CEO being someone who called all the shots, always had to have the right answers and was the center of attention—which is not me. But I’ve realized what my leadership style is and how I can make that work within our company. It’s not about me. It’s about creating an environment where people feel empowered. There’s actually power in not having the right answers and making sure that everyone else feels the comfort and ability to act as a team. That’s a foundation of the culture here now. (Mar 2018) [5]
Q: As the CEO of a division, do you ever get pushback from your parent company about the policies you’ve put in place? A: Post Holdings’s philosophy is that its divisions know what they’re doing, and it doesn’t try to synergize too much across divisions. So we’ve never gotten any pushback. That might be different if our results weren’t as great as they are, but as of now Post is incredibly supportive. (Mar 2018) [5]
At PNC (e.g. Premier Nutrition Company - Outliers), culture is a big deal. When you walk in the door you can instantly feel the good energy, the positivity and the passion their people emulate. Everyone at PNC is all-in. Their culture is built on four values that are the foundation the company sits on and the behavior that Darcy and her executive leadership team model.
The PNC team are builders. They challenge the status quo and are constantly thinking about what’s next and how to do it better.
They are champions of positive nutrition. They encourage and support an active and healthy life for their customers and themselves.
They are better together. They value each member of the team and know that success is only achievable through the team’s collective efforts.
They ring the bell. The PNC office has a cow bell that’s used to celebrate the small victories as well as the big wins.
To further strengthen these cultural tenets and inspire the PNC employees, Bulldog helped develop the PNC Builder Workshop Series. Each quarter, a thought leader is invited to the PNC office to lead a presentation and immersive session on an aspect of leadership and building a business or a brand. Neil Grimmer, Co-Founder of Plum Organics, talked about how he has been a “builder” in his successful career. And, Lucy Postins from The Honest Kitchen recently shared her experiences as an “accidental entrepreneur” and her relentless pursuit of positive pet nutrition. (May 2018) [6]
Our portfolio has significant organic potential with four key strategies to drive growth.
Household penetration. We believe Premier Protein and the RTD shake category are in the early stages of consumer adoption. In 2020, we increased Premier Protein household penetration by 17% and we plan to continue pushing these successful strategies.
Distribution. Both Premier Protein and Dymatize have significant upside in existing channels as well as new channels. We are encouraged by gains in total distribution points for Premier Protein (+26% in 2020) as well as nearly doubling our BellRing eCommerce business in 2020.
Innovation. We have had tremendous success in product innovation through new flavors, package types and line extensions. This is a key growth driver and we have dramatically increased innovation capabilities in recent years.
International Expansion. International currently represents 11% of our business and we continue to remain optimistic with respect to its long-term growth prospects. (Dec 2020) [14]
Our mission as a company is to ‘Bring Good Energy to the World.’ We believe ‘what’ we do is as important as ‘how’ we do it. Our products deliver nutrition people need and can’t wait to have—with optimism, kindness and a relentless drive to win. We ‘play to win’ but we also value ‘paying it forward’ and ‘ringing the bell.’ In 2021, our Emeryville, California team was named a Great Place to Work in the U.S. for the fifth year in a row. Our culture is the fuel to our growth and remains one of the key differentiators contributing to our success. (Nov 2021) [15]
Reference:
[1] How Post Brands exec President Darcy Davenport is growing the nutrition bar brand https://www.bizjournals.com/sanfrancisco/news/2017/08/24/post-brands-premier-nutrition-darcy-davenport-bar.html
[2] Darcy Horn Davenport ’95 Leads a Major Player in the Healthy-Eating Marketplace https://paw.princeton.edu/article/darcy-horn-davenport-95-leads-major-player-healthy-eating-marketplace
[3] What Should a New CEO Focus on First? And Just as Importantly, Next? https://www.inc.com/jeff-haden/what-should-a-new-ceo-focus-on-first-just-as-importantly-next.html
[4] Chief Executive Magazine March/April 2018 https://issuu.com/chiefexecutive/docs/issuu-_ma18
[5] 26-Mar-18 Q&A: Premier Nutrition’s Darcy Horn Davenport https://chiefexecutive.net/qa-premier-nutrition-president-darcy-horn-davenport/
[6] 15-May-18 Creating a Vibrant Culture with Premier Nutrition https://medium.com/swlh/creating-a-vibrant-culture-with-premier-nutrition-8fe89fa50dd4
[7] Post’s active nutrition business to be named BellRing Brands following i.p.o. https://www.foodbusinessnews.net/articles/14554-posts-active-nutrition-business-to-be-named-bellring-brands-following-ipo
[8] PowerBar maker BellRing Brands raises $516M in IPO https://www.bizjournals.com/bizwomen/news/latest-news/2019/10/powerbar-maker-bellring-brands-raises-516m-in-ipo.html
[9] Post Holdings IPO of BellRing Brands – Update November 21, 2019 https://stockspinoffinvesting.com/spin-offs/post-holdings-ipo-of-bellring-brands-update-november-21-2019/
[10] Organic growth tops BellRing Brands agenda https://www.just-food.com/news/organic-growth-tops-bellring-brands-agenda/
[11] BellRing Brands Spins Off From Post https://www.foodprocessing.com/industrynews/2019/bellring-brands-spins-off/
[12] 2019 AR https://www.annualreports.com/HostedData/AnnualReportArchive/b/NYSE_BRBR_2019.pdf
[13] Post Holding’s spun-off BellRing off to a rocky start with pandemic, but confident in long-term results https://www.foodnavigator-usa.com/Article/2020/08/11/Post-Holding-s-spun-off-BellRing-off-to-a-rocky-start-with-pandemic-but-confident-in-long-term-results
[14] 2020 AR https://www.annualreports.com/HostedData/AnnualReportArchive/b/NYSE_BRBR_2020.pdf
[15] 2021 AR https://cdn.bellring.com/assets/pdf/BRBR-2021-Annual-Report.pdf