Advertisements
 

Branston deal a reminder of what a pickle Premier Foods has got itself into

October 31, 2012

Old food brands don’t die, they just get traded away. The latest to fall under the auctioneer’s hammer is Branston – sweet pickle, but also ketchup, mayonnaise and salad cream – which has been knocked down to Japanese relishes specialist Mizkan for £92.5m. It’s the second deal Premier Foods has done with Mizkan. Earlier this year, Premier sold its Haywards pickles business and Sarson’s vinegar brand to the privately-owned Japanese company for £41m.

Not so long ago, Premier was being billed as Britain’s biggest (indigenous) food company. That reputation has long gone, as the company struggles to placate an increasingly disenchanted City with a seemingly endless series of disposals aimed at tackling massive over-leverage (it borrowed far too much in the good years) and a burgeoning pension liability.

The finance boys, not to mention Premier’s new(ish) broom chief executive Michael Clarke (formerly Kraft Food Euro chief), are so chuffed at being ahead of schedule in reducing the debt mountain that they seem to have forgotten what the company is supposed to be about.

These days, the only media ripple Premier manages to make is when it announces yet another fire-sale. Last December it was Brookes Avana, its loss-making chilled food business, sold for £30m. Earlier in 2011, it canning business went to Princes (now part of Mitsubishi) for £182m, and before that, the meat-free business – commonly known as Quorn – for £205m.

In fact, so many brands have disappeared from the portfolio in the past few years that people must wonder what – if anything apart from trying to make money – the Premier umbrella brand stands for these days. Remember Gale’s Honey? Robertson’s Jam? Hartley’s? Chiver’s? Typhoo Tea? All once UK household names – now long since divested.

And more disposals are on the way. Bird’s Custard, for example. And even – if the price is right – the Premier bread business; that’s Hovis to you and me. Which, if I remember rightly, was the jewel in the crown when Premier acquired the old Ranks Hovis McDougall business back in 2007.

The talk in the boardroom is of scaling back to the unassailable fortress of Premier’s so-called “Power Brands”, of which Hovis is currently one (yes, that unassailable). The others are Mr Kipling, Ambrosia, Sharwood’s, Loyd Grossman, Oxo, Bisto, and Batchelors.

To the untutored eye, there’s nothing very “unassailable” about any of these, either. The Loyd Grossman business is unlikely to much outlive the celebrity of its founder. As for Bisto, Batchelors, Mr Kipling and Ambrosia, they are in – or moving towards – the brand museum category: famous items in the pantry a generation ago, but now confined to a dubious ranking on the health traffic light scheme featuring in your local supermarket.

Unilever and the likes of Néstlé, Kraft, Campbell’s and RHM saw the dismal future awaiting such brands long ago, which is why they first cut off marketing support and then disposed of them. Scavenging such brands may have made sense while borrowing costs were no object; and while the supermarkets were prepared to offer them a reasonable amount of shelf space. But they aren’t any more.

For these reasons, a big question mark hangs over Premier, its “Power Brands”, and the continuing viability of its business model.

Advertisements

Brands show their sensitive gay side

July 11, 2012

Pink: it’s the new black. Brands are falling over each other to “out” themselves as fellow travellers in the Lesbian, Bisexual, Gay and Transgender community (hereto after, LBGT).

First we had Kraft, with its Gay Pride rainbow cookie, posted on a Facebook page. Then Google joined forces with Citigroup and Ernest & Young to promote a joint campaign that  is to highlight the privations suffered by LBGTs around the world. And now – improbably enough – a famous Premier League club has joined the throng.

No, not Chelsea attempting to smother the unpleasant odour of racism emanating from the John Terry court case. Or, for that matter, Queen’s Park Rangers. Liverpool is the first Premier League club to be officially represented in an LBGT event in Britain. A banner featuring the club’s crest is to be carried by staff and members of the women’s team at next month’s Liverpool Pride.

According to Liverpool FC managing director Ian Ayre, the initiative is all about ridding football of homophobia. Earlier this year he helped organise a Football v Homophobia tournament hosted at the club’s academy. Good luck to him: it’s an all-too-evident flaw marring the Beautiful Game, and he’s trying to do something about it.

Less clear is what Kraft (and the others) are up to. Is there an identifiable gay cookie sector? Or do LBGTs simply consume cookies like everyone else? The Facebook campaign, which consisted of an image of an Oreo cookie with six layers of rainbow-coloured creams and the caption ‘Proudly Supports Love’, certainly managed to court controversy. Within a few days, there were 38,000 comments on the site, and nearly 250,000 ‘likes’. Most of the comments were positive, but some were decidedly hostile – and within a few days a ‘Boycott Oreo’ page had sprung up on Facebook, fueled no doubt by neat Bible-Belt bigotry.

Was Kraft really standing up to be counted? I doubt it. More likely, Barack Obama’s forthright backing for same-sex marriage has given brands “permission” to go mainstream on the subject.

By way of explanation Basil Maglaris, Kraft’s associate director of corporate affairs, tells us: “As a company, Kraft Foods has a proud history of celebrating diversity and inclusiveness. We feel the Oreo ad is a fun reflection of our values.”  A “fun reflection”, eh? The smile may be on the other side of its corporate face if Kraft visibly falls down on its employment diversity programme any time soon.


Rosenfeld’s wretched road to Mondelez

March 22, 2012

By and large, corporate life is no laughing matter. One exception – and a cause of bottomless mirth at that – is the pompous business of corporate name-minting.

Latest in a long line of jokes is “Mondelez International”. What, you ask? It’s the new monicker for the Kraft spin-off snack business which will shortly be headed by Irene Rosenfeld, after offloading the lumbering US grocery business onto poor old Tony Vernon.

One of Vernon’s few high cards will be the fact that he retains the Kraft name which, whatever its downmarket connotations, has the merit of being agreeably monosyllabic and memorable.

If only we could say the same for Mondelez International. Why, oh why (as The Daily Mail might put it) couldn’t it take the Cadbury name? After all, organisationally and with the exception of a few Kraft legacy brands such as Oreo, Mondelez is the ex-Cadbury company. It faithfully maps Cadbury’s emerging markets strategy and, if it is to achieve the higher margin growth commonly associated with the snack sector, that will in no small part be due to the dominance of Cadbury brands within its portfolio.

Instead of the instant mnemonic, however, we have the instantly forgettable “Mondelez”. Apparently, this was dredged up from an exhaustive trawl of 2,000 ideas – fashionably and inexpensively crowd-sourced from Kraft employees. The ultimate choice was, in fact, a portmanteau word derived from one suggestion fielded in America and another in Europe. Which probably tells you all you need to know about Rosenfeld’s imaginative powers. Camel, horse, committee anyone?

On second thoughts, however, I’m not entirely convinced by this folksy little conceit of hers. “Mondelez” has about it a strong whiff of corporate ID specialist. Allegedly it’s a bit of cod-Latin, derived from a hybrid of mundus (world) and delectatio (delight or pleasure), which is more readily understood by substituting the French modern equivalents “monde” and “délice”. Note the subtle potential French wordplay – Mon délice – perfect but for the fact it is grammatically incorrect, délice being feminine.

What does all this remind you of? Yes, right first time: Diageo, Altria, Aviva and most memorable of all – for the wrong reasons – Consignia. All of these rejoice in being bland latinisms (although Diageo sounds all Greek to me – dia, “through”; geo, “world”: but let’s not get pedantic about it). It seems a curious irony that at a time when interest in classical languages is at an all time low, corporate identity specialists have turned their abuse into a high art form.

And, in their earnestness not to create offence by minting something more meaningful, have often achieved laughable results. Take Aviva for example. On one reading, it could mean “Without life”.

As for Mondelez, which Americans clearly have difficulty in pronouncing, I shall leave you with the wise words of Sharon Shedroff, founder of San Diego consulting firm Strategic Vision Inc:

“Until the brand is established, it will be difficult for people to give it meaning in the US and probably in Asia. Brands under it, like Oreo, could lend credibility to Mondelez.”

So why go to the trouble and expense in the first place?


Watch out, there’s a Hytner about – Jim takes the helm at IPG’s Initiative

March 4, 2012

Interesting to see that Jim Hytner – whose career has more switchbacks to it than the mille miglia – is once more emerging triumphant from the quicksand of a career in marketing.

Hytner has just replaced long-serving Richard Beaven as worldwide chief executive of Interpublic Group subsidiary Initiative. Beaven (a surprisingly urbane man for the head of a media-buying house) has apparently left to spend more time with his passion for photography, an alternative vocation he says he has toyed with since childhood.

While none of this is to be doubted, we wonder whether he was also uncomfortably lodged in a career cul-de-sac. Beaven was once seen as a successor to Nick Brien when Brien left Mediabrands (the overarching arm of Interpublic’s media operations) to take on the top job at McCann Worldgroup. But the Mediabrands role instead went to Beaven’s chief rival at Universal McCann, Matt Seiler, who has been aggressively reorganising McCann’s media operations ever since.

Anyway, enter Jim. He’s relatively new to the world of media buying, having joined another IPG subsidiary, Universal McCann’s G14 (essentially the bits that aren’t America), as its boss only two years or so ago. Like Brien, he’s a Brit who has done rather well in the upper echelons of American-dominated McCann – the traditional breadbasket of Interpublic Group. There, however, the parallel ends. Where Brien is essentially a media services specialist who has made it into top agency management, Hytner’s much more colourful career has embraced the full ambit of marketing: he’s been an FMCG client; marketing director at some of Britain’s top television companies; client at one of Britain’s leading banks; a digital content wonk; and is now trying his hand – seemingly successfully – at the agency business.

The first thing to note about Jim is he is the youngest scion of a talented and very competitive family. All three Hytner brothers – the sons of a successful Manchester barrister – have set the bar high in their chosen fields. Nicholas, now Sir Nicholas, is the director of the National Theatre with such successes as the Madness of George III and The History Boys to his name. Richard, a lawyer by training and a Sloan Fellow of London Business School, is now deputy chairman of Saatchi & Saatchi Worldwide.

“Cheeky chappy” Jim, less cerebral than his two brothers (they went to Oxbridge; he went to a redbrick), gives every appearance of being a lot more entrepreneurial. Certainly the young Hytner was prepared to give anything a go. First, like his eldest brother, he tried to tread the boards, but this was trumped by a potential career as a chef de cuisine. The way he tells it, his attempts to follow in the footsteps of Marco Pierre White and Gordon Ramsay stopped dead one night, when thanks to a kitchen shift at the exclusive Miller House Hotel in the Lake District, he suddenly realised he was going to miss the 1985 FA Cup Final between Manchester United and Everton. To say that Jim is fanatical about Manchester United would be a considerable understatement. He (like more self-effacing elder brother Richard – though I’m not so sure of Sir Nick’s views on this subject) eats, lives and breathes the club’s highs and lows. “It’s the one final I’ve ever missed in my whole life, so I thought I can’t be doing with this hotel lark,” he tells us. Haute cuisine‘s loss was marketing’s or, more specifically, Kraft’s gain.

To this day, football analogies are never long absent from Jim’s utterances. And, in truth, it is a passion that has stood his career in good stead in the laddish, sports-mad environments of Sky TV, ITV – where he was marketing director – and (dare I mention it?) media buying circles. Though what Americans make of all this “soccer” talk, I have no idea.

Will Jim ever reach the top – conceivably, in time, replacing Brien? Over the years, Hytner’s maverick antics have made him a rather endearing fixture of the UK marketing scene. But they have also raised questions about his gravitas. This, after all, was the man who dreamt up those infamous idents of celeb TV personality Keith Chegwin in the nude when he was marketing director of Channel 5. What Jim may choose to call “brave” others in the industry characterise as controversy for the sake of controversy. He did something to allay this enfant terrible reputation during a (comparatively sober) stint as UK marketing director of Barclays Bank. But it remains to be seen whether he has mellowed sufficiently in his middle years…


Tamara Minick-Scokalo resurfaces in top role at Pearson

February 22, 2012

The career of high-flying international executive Tamara Minick-Scokalo has, it seems, become a staple feature of this blog. So it might be of interest to note that she has just landed another top job.

Pearson, owner among other things of The Financial Times and Penguin, has picked her as president Europe, Middle East, Africa and the Caribbean of its education business.

Minick-Scokalo, who is currently based in Geneva, has had a somewhat chequered résumé in recent years. Twenty years into a marketing career at Procter & Gamble, she briefly switched to senior European marketing roles at EJ Gallo and Elizabeth Arden before surfacing at Cadbury as head of global commerce in 2007. That move was a success, but the subsequent appointment to president of Cadbury Europe was not: she left less than a year later. Only to emerge triumphant and phoenix-like, in 2010, as the new president of chocolate Europe, following Kraft’s takeover of Cadbury.

But the title was an illusion, and carried much less weight than her previous operational role at Cadbury. Minick-Scokalo – like other senior ex-Cadburyites – seems to have found Kraft excessively bureaucratic and the idea of a career centered in Zurich frankly unappetising.

She left less than 6 months later, and – interestingly for such a corporate creature – set up as an entrepreneur. Trax, which is what she founded, is an IT/sales and marketing operation specialising in retail. What will happen to it now, I have no idea.

The international education division, headed by chief executive John Fallon, is viewed as one of Pearson’s most aggressively expanding operations. It has made several large scale acquisitions in recent years, including the Wall Street education business and the China-based Global Education and Technology Group. Minick-Scokalo clearly has experience of corporate integration at the highest level. Nevertheless, her marketing pedigree is probably more in demand at Pearson.


Publicis Groupe raids top Chinese shop Betterway after corruption scandal

February 20, 2012

News reaches me that Publicis Groupe has raided one of its most important marketing services outlets in China, after corrupt practices came to light.

Betterway/Publicis Dialog, the outlet in question, is China’s largest field marketing network, with offices in Shanghai, Beijing, Chengdu and Guangzhou.

The company is said to have raided its subsidiary last week and to have sent all staff home. Arrests are rumoured, but unconfirmed.

The driving force behind Betterway is CEO York Huang, a former Procter & Gamble executive, who joined the company in 2001. In 2006 PG acquired an 80% stake in Betterway. Huang and junior partner Jenny Zhang remained minority stakeholders.

Two years ago, PG claimed Betterway had 346 full-time employees and 15,000 part-time staff operating in over 100 cities. Principal clients include Wrigley, Kraft, Microsoft, J&J, L’Oréal, Coca-Cola and Samsung. Betterway won a substantial contract from China Mobile and China Telecom to represent them at the high-profile 2010 Shanghai Expo.

What has gone wrong? It seems that despite the Chinese marketing services economy growing at over 10% a year, some just can’t get their hands on enough money. The speculation – and I stress that it’s no more at this stage – is certain senior Betterway executives created a ‘shadow’ agency which then pumped revenues into Betterway in order to inflate revenue, and thereby substantially boost their earnouts.

Publicis has had problems dealing with corrupt practices in its Chinese operations before, of course. Readers of this blog may recall that, in September 2010, it fired Vivaki Exchange’s chief executive Warren Hui and general manager Ye Pengtao .

More on the Betterway story when I have it.


Kraft split raises more doubts about value of Cadbury takeover

August 4, 2011

On hearing that Kraft intended to split it operation into two, the first image that came to my mind was that of the Grand Old Duke of York.

Hopefully (for the sake of shareholders if no one else) Kraft chief Irene Rosenfeld’s grasp of tactics is superior to that of the benighted generalissimo. But we cannot be sure at this stage and nor – judging by their confused reaction – are some of Kraft’s investors.

True, one of the most tiresome of these – corporate raider Nelson Peltz, who has been endlessly belabouring Rosenfeld for Kraft’s dead-in-the-water share price – thinks it’s a great idea to split the lumbering behemoth into a fast-track candy and snacks company centred on emerging markets (and by implication double digit growth) while leaving the dreary North American grocery business to slumber on as a “yield centre” with a no-hope share price.

According to his logic, Rosenfeld has been playing a long and crafty (sorry) strategic game, in which the $19bn Cadbury hostile takeover was only the first move. Rosenfeld needed Cadbury for its dominance in emerging markets, so she could reshape Kraft’s existing snack lines into a global growth business. Warren Buffett, another long-time Rosenfeld critic, seems to have adopted the same line, albeit in more muted language.

Having met Rosenfeld, I can attest that she indeed a very sharp cookie. But whether she has been that crafty I – and rather more importantly, many members of the investment community – have reason to question.

Undoubtedly she has been limbering up a dramatic piece of financial engineering for some time. But maybe that’s all it is: one last, opportunistic, throw of the corporate dice to get two of her most irksome and powerful critics off her back.

Here’s the flaw in the grand strategy theory. If Rosenfeld had the idea of capturing access to developing markets all along, how come she so successfully managed to jettison all the senior people who knew anything about exploiting them? I am of course talking about virtually the entire senior tier of Cadbury management, which formed a queue to the exit within months of the takeover in early 2010.

I am afraid Kraft lifer Tim Cofer – if that’s who ends up getting the top job at Kraft Snacks and Candy – simply won’t cut the mustard by comparison.

If Kraft, in buying Cadbury, was merely parlaying itself into the world’s emerging markets, it chose a peculiarly clumsy and perverse way to do it.


%d bloggers like this: