The ouster of David Gustin, former president-chief operating officer, ConAgra Grocery Products Cos., in the company's Fullerton, Calif., office has set off a chain of executive departures, including that of Ron Doornink, president-Orville Redenbacher/Swiss Miss Foods Co., who recently spearheaded a review for the popcorn and cocoa brands. Joe Jimenez, who is heading the review for some remaining products as president of Wesson/Peter Pan, now also takes on responsibility for popcorn and Swiss Miss.
"Gustin and Doornink were the most marketing-driven people at that company," said a West Coast executive familiar with Hunt-Wesson, who emphasized that parent ConAgra is commodity-driven. "This was a loud message" that ad spending will now take even more of a backseat to the bottom line.
BAD AD NEWS
That could spell bad news for contenders for the business now under review. Existing Hunt-Wesson shops believed to be in the running are Berry Brown, Dallas; Houston Helm & Co., Los Angeles; Campbell Mithun Esty, Minneapolis; and Redenbacher agency Euro RSCG Tatham, Chicago.
The brands came up for review after longtime Hunt-Wesson agency Ketchum Advertising, San Francisco, was absorbed into TBWA Chiat/Day; it was unsuccessful defending the $10 million to $12 million Orville Redenbacher account.
Agencies involved referred calls to Hunt-Wesson, but at least one executive close to the company said the review is continuing despite the management change.
Succeeding Mr. Gustin as president-chief operating officer of the $5.62 billion Grocery Products unit is Raymond De Riggi, put in place only two days before ConAgra released its fiscal 1998 earnings.
In addition to Mr. Doornink's departure, Edward Snell, formerly president of Hunt-Wesson Grocery Products Co., was moved to president, Hunt Foods Co., reporting to Mr. De Riggi, a ConAgra spokeswoman confirmed.
4TH QUARTER DOWN
On July 1, ConAgra announced diluted earnings per share for its fourth quarter were down 12%, a warning signal from a company that has promised investors 14% growth.
The shake-up, however, perplexed analysts and competitors because the ConAgra Grocery and Diversified Products unit to which Hunt-Wesson reports showed sales up 5.4% for the year and operating profit up 12.5%, to $913 million.
DLJ Securities analyst William Leach said the Grocery Products unit reported 11% volume growth in the fourth quarter, noting other units of ConAgra, particularly poultry, are much more troubled.
Volume growth in the division is puzzling, given Hunt-Wesson's most recent data. Figures from Information Resources Inc. for the 52 weeks ended May 24 show precipitous declines. In spaghetti sauce, Healthy Choice was down 21.4% in dollar sales, to $43.2 million; Peter Pan fell 5% to $113.2 million; and La Choy was about flat at $87.2 million.
Orville Redenbacher, an exception, was up slightly for combined microwave and kernel varieties, to $261.1 million.
Hunt-Wesson can't cut ad spending on its brands much further. Competitive Media Reporting shows ConAgra spent a total of just $16 million in the first calendar quarter of '98 on measured media, with Peter Pan receiving less than $200,000, Mediterania pasta sauce getting $1.2 million and Healthy Choice soup $3.1 million.
ConAgra spending for calendar 1997 was $91.5 million, with only one Hunt-Wesson brand, Orville Redenbacher, receiving more than $5 million in measured spending.
"They [historically] pull the plug on the media" when earnings don't meet expectations, said Reach Marketing consultant Burt Flickinger.