Groomed to succeed

From publishing to beer, magnates' kids are preparing to take power, writes Francine Cunningham

ON THE day Caroline Krug was born, she was given a tiny sip of champagne. It was an instant initiation into her family's 150 year-old champagne dynasty, the House of Krug.

"I tasted champagne before mother's milk," said Ms Krug, who is now heads US marketing for the wine-maker based in Rheims, France. She is just one of the corporate princes and princesses being groomed to take over some of the most prominent family businesses in the world. Other names include Lauder, Busch, Ford, Coors, and Ferragamo.

The younger generation can bring new blood and innovative ideas to tradition- bound family empires, but their every move will be scrutinised by competitors, envious colleagues and nervous shareholders.

When Ms Krug, 31, gave in to her father's wishes for her to join the House of Krug, she began an education in every aspect of the champagne business, from grape pressing to financial planning.

"The company is us and we are the company," she said. "The important thing is to continue the quality and tradition, and to stay in the top category of fine champagnes. The most difficult thing is to bring something new to the business."

In an attempt to attract consumers of her own age group, Ms Krug suggested the creation of a Champagne six-pack. The idea may have appalled some wine purists, but it proved popular with young drinkers.

The younger generation have brought innovation to other family-dominated firms. Edgar Bronfman Jnr, chief executive of Seagram, helped expand the beverages company into the entertainment business.

But blood and business do not always mix well. There is potential for simmering family feuds over which member of the younger generation shall get the top job. Experienced employees can also resent the idea that a family member could be parachuted into a senior post.

Paul Karofsky, executive director of the Northeastern University Centre for Family Business in Boston, has observed the tremendous pressure on heirs to the corporate throne. "Family member must hold themselves and will be held by others to a higher standard than non-family members. More will be expected of them because of who they are."

Jane Lauder, the 24-year-old grand-daughter of the founder of Estee Lauder Companies, is the youngest member in the family's cosmetics empire. She works as a marketing manager for the Clinique brand.

While growing up, Ms Lauder received make-up tips from Estee Lauder herself. Today she dismisses the pressure she is under as "irrelevant" and insists that what matters is the end result for the customer.

Her father, Leonard Lauder, chairman of Estee Lauder, recalled some informal training he had given to the youngest generation of Lauders over dinner some years ago. He had returned from visiting a US retailer where the chief executive had publicly belittled employees.

"I spoke with the family and said: `OK, what did he do wrong?'" The point of the lesson was that workers are more likely to be loyal if they are treated with respect.

As the younger generation comes up, they absorb inside information about the family business through casual conversation at home. This may give them the edge over non-family executives.

Of course, there is no guarantee that just because daddy or mummy is a financial whiz, junior will be one as well.

"Families can't force the issue," said John Davis, a senior lecturer at the Harvard Business School. "But they can expose the younger generation to the company and insist that they get the right education and experience so that people can believe in them."

Even the most careful training

is not foolproof, according to Mr Davis who is co-author of Generation to Generation (Harvard University Press). "I have seen situations where so much has gone wrong a family couldn't save itself or the company. Some families are so divisive that even though they are competent, they cannot take a decision. They are set for a very painful demise."

August A. Busch IV, 34, is head of marketing at the Anheuser-Busch beer empire. He has been praised for giving a new, fresh image to the stale Budweiser brand, with a series of trendy commercials.

Rupert Murdoch declared last year that his son Lachlan, 26, will be his eventual successor. He has been groomed since he was a student, with Mr Murdoch bringing him into vital business meetings. The tattooed Lachlan currently heads News Corporation's Australia media unit, News Limited. He is known for bringing a populist touch to newspapers.

Lachlan's older sister Elisabeth is general manager of British Sky Broadcasting, while his younger brother James is president of News American Digital Publishing.

Up-and-coming moguls may also find their personal life in the media spotlight. At 19, the young Mr Busch was involved in a highly publicised car accident when he crashed a Corvette and a female companion died.

In the end, company heirs will not be judged by their illustrious name; they will be assessed by their ability to sell beauty compacts, newspapers or crates of beer.