TORONTO (FNS) -- Former Loblaw executive David Nichol will become president of private-label soft-drink company Cott Corp. here Oct. 1, a move that caught some retail analysts by surprise.
Nichol, the mastermind behind the successful President's Choice private label, among others, left Loblaw earlier this year to become a consultant to several chains, including Loblaw and Wal-Mart.
In late July, he appeared at Cott's annual meeting where company Chairman Gerald Pencer announced that Cott and Nichol would become partners in a new company to develop retail brand foods.
He'll take over the presidency of Cott from Heather Reisman, who resigned in late August "to carve a path of my own design," she said in a statement.
The announcement caught some industry observers off guard.
"I'm surprised she's leaving, but then again you tend to get a lot of turnover in a growth company," said Jack Maxwell, an analyst with stock brokerage house Wheat First Butcher & Singer of Richmond, Va.
Maxwell is a strong supporter of Cott, which trades in the United States on the Nasdaq exchange in New York, and predicts its earnings per share will more than double to 95 cents by fiscal 1996.
"I think hiring Nichol was a good move. He's been a consultant to Cott for a few months. Now he'll be part of the inner circle," he said.
Philip Koven of the brokerage firm Richardson Greenshields here was also surprised that
here was also surprised that Reisman was leaving, but not that Nichol was joining Cott. "Nichol was coming one way or another," Koven said. "Cott is selling pop. Why not get him to help sell all sorts of other products?"
Other observers questioned the wisdom of drawing Nichol into that "inner circle." One Toronto analyst, who asked not to be identified, said Cott may risk alienating major customer Loblaw.
"Loblaw represents about 35% of Cott's private-label business, and they could become very vulnerable if they lost it," the analyst said.
At virtually the same time Cott was announcing Nichol would come on as president, it said Loblaw had decided not to renew its contract with Cott subsidiary Lakeport Brewing Corp. to supply its "PC" President's Choice beer.
Industry speculation is that Loblaw is shopping around the President's Choice soft-drink contract, which Cott has until 1996. Loblaw declined to discuss its plans.
Another industry observer said the Nichol appointment could be a smokescreen for serious problems at Cott, arguing that Nichol and Cott could achieve their objective of creating new brands without Nichol joining the company, as originally planned under the joint venture.
"It's totally contradictory to what Nichol has been saying in recent months," said the analyst, who also requested anonymity. "One Cott official told me that Reisman left because she didn't want to play second fiddle to Nichol."
He said Cott's biggest challenge is to develop an internal and external organization capable of supporting a company that could potentially reach $1 billion in sales, something Reisman was brought in to do in 1992. "Nichol is more of a sales and marketing guy," he said.
The analyst also said Cott is in a weakened position "because the price of Cott cola is a lot closer to the national brands than it was -- about $1 difference now for 24 cans, versus $3 a year ago."
Some blame that weakness for the sharp drop in Cott's stock, from a high of almost $50 (Canadian) last October to less than $15 today, on the company's revised earnings estimates.