Ricardo Obregón Trujillo • A Game-Changer Of Family Enterprises


Photo: Courtesy of Inversiones Mundial

former CEO, Bavaria y de Grupo Carvajal

In July 2005, Ricardo Obregón Trujillo was president of the Colombian brewer Bavaria when it merged with SABMiller in a $7.8 billion dollar deal, the biggest in the country’s history. Before the merger, Obregón Trujillo had helped to transform the conglomerate of Julio Mario Santo Domingo – the owner of Bavaria – into a more modern operation. Ten years before that, Grupo Santo Domingo owned more than 40 companies in a wide scope of sectors that included aluminum, automobiles, communications media, petrochemicals, fishing, and it was even the owner of the airline Avianca. By the time of the merger, it was much more concentrated in the production of beer and other beverages.

During the time of import substitution in Latin America, economic groups created large networks of companies shielded by tariff protection, Obregón Trujillo said. During the phase of the opening to international trade in the 1990s, the more intense competition forced them to become more focused, “and not think of so many businesses at one time.”

Meanwhile, before the merger, Obregón Trujillo had made some major changes at Bavaria. Shortly after he arrived at the company in 2001, he had had to take on the most difficult job in his life, when it was clear that they had to close eight of the 15 plants the brewery had in the country. “We were operating at 55 percent of capacity, but after the closings, we ended up at 85 percent. There were many unproductive assets,” he said. He managed the staff layoffs with respect. “We paid them six years of salary, a demonstration that the company was conscious of the drama this meant for their families,” he said.

What he did at the time was, in his own words, “accommodate the business circumstances to those of an environment in which inefficiencies were no longer permitted.” He closed the plants in three days. “When it came to the sales process, the added value we had achieved was enormous,” he said.

The task of focusing an entrepreneurial conglomerate was repeated after 2008 in another large Colombian family business, Grupo Carvajal. The decision to change the nature of the group had been made several years before by his predecessor as president of the group, Adolfo Carvajal (winner of the International CEO of the Year BRAVO Award in 1997). Between the two of them, each in his own time, they transformed this family company into a firm with good corporate governance. “Even though there had been no outside investors, the family decided to prepare the company for a listing on the stock market, and it was up to me to arrange a bond issue,” he recalled. “The IFC helped a lot when they became creditors.”

In addition to adopting this more institutional operation, it also led the group to focus on its most important and profitable businesses. Soon after it was done, they sold or liquidated 28 business units.

In the new business environment, even the most traditional businesses of family enterprises have to be transformed. If they cannot change, any competent businessman will recommend to get rid of them, Obregón Trujillo believes. “The sentimental aspect is increasingly less evident in the world of business,” he said.

Obregon Trujillo thinks the step that is missing for many Latin American businesses is listing themselves on the public exchanges. He remembers the case of Disney, which was founded in 1926, and in 1940 when it found opportunities for growth, it issued shares on the stock exchange. “That was 70 years ago. In these countries, families are reluctant to list their companies on the public markets because they have to comply with stricter regulations, and for fear of losing control. Today, that’s wrong,” he said. He thinks that organic growth isn’t enough to adjust to such a competitive environment. “To survive, Latin American companies have to take drastic actions so as not to lose themselves in this world of economies of scale.”

Over the last two decades, Ricardo Obregón Trujillo has transformed two large family enterprises into more institutionalized companies, focused them on their key businesses, and made them more profitable. That is a part of the map that has been laid out for small multilatinas that want to be successful.


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