Tesco has promoted its fresh foods chief to the executive committee.

Colin Holmes – a Tesco lifer who has been with the business more than 20 years – will continue as fresh foods commercial director. He has also spent time as UK finance director and in the convenience arm.

A Tesco spokesman said the appointment demonstrates the grocer’s ability to “spot talent in the business” and added: “As we move into new markets investing in developing strong leaders becomes even more important.”

Some observers believe that Sir Terry Leahy’s successor will come from the second tier of bosses, which Holmes is part of, rather than from among the main board directors.

One source said Holmes’ promotion is an incentive for him to stay at Tesco. Last week it lost UK finance director Eamonn O’Hare, who left to head Virgin Media, and it has previously lost key executives such as John Browett and Scott Wheway.