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Corporate america is hanging a huge "For sale" sign over some of the country's best-known food brands.

Among the growing list of blue-chip food brands gobbled up this year: Tropicana, Birds Eye, Chiffon, Parkay, Blue Bonnet, Beech-Nut and Duncan Hines.

Pillsbury is putting Las Palmas, Pet and other select brands up for grabs; Kraft Foods is seeking a buyer for Baker's chocolate and coconut, and H.J. Heinz Co. has sought to peddle Budget Gourmet and Weight Watchers frozen foods.

Even Aurora Foods, the company created by adopting so-called orphan brands, sold off Van de Kamps frozen desserts in May.

"There's intense pressure on the food industry to improve performance," says Ian Wilson, chairman-CEO of Aurora, the $874.2 million company that went public in June. "Look at all the changes in [earnings] estimates," he says, noting Hershey Foods Corp., ConAgra, Kellogg Co. and Archer Daniels Midland lowered their earnings estimates during the year. "They can't afford low-growth brands," he says.


"All through the '80s, there was an absolute ability to increase prices . . . companies took 3% price increases twice a year," he says., noting consumers now won't accept such automatic jumps. Further, Mr. Wilson says, "The Street has been more critical of brands with baggage."

The economy is abetting the process. Food companies "are not strapped for cash, they can borrow very cheaply," says Ken Harris, partner at consultancy Cannondale Associates. Buying an established brand is much less expensive than building one from scratch, he says.

Conversely, new investors look for easy-to-understand investments, says Mitch Goldstein, VP-strategic planning and corporate development at Vlasic Foods International, the Campbell Soup Co. spinoff of neglected brands, Swanson and Vlasic. "People are willing to pay a premium for predictability," he says, pointing to the popularity of stocks such as Coca-Cola Co. and Wm. Wrigley Jr. Co., which offer limited brand portfolios.

Aurora is considered the model of orphan brand adoption. By paring $66 million in costs from discontinued operations, outsourcing production and other means, it has pumped up marketing coffers.

But Mr. Wilson maintains Aurora isn't a turnaround specialist, it merely reverses the recipe that orphaned its brands in the first place.

The previous owners "cut back on consumer advertising, sold off market share, placed the savings into cash and pumped up trade promotion," he says. Aurora "cuts back on trade promotion and goes back to consumer advertising" to rebuild the brands.

The result, he says, speaks for itself. Van de Kamp suffered a 2.5% decline in dollar sales prior to the acquisition, based on data from both ACNielsen Corp. and Information Resources Inc., but rose 5% in sales within 18 months of the acquisition.

Similarly, Mrs. Paul's went from a 9.2% dollar drop to 7.1% in growth; Aunt Jemima from an 8.9% decline to a 10.5% gain; and Celeste from a negative 16.8% to a positive 8.6%.

Many of the brands that changed hands this year went to large companies. PepsiCo swallowed up Tropicana Products from Seagram Co., which bought it a decade earlier from Beatrice Co. in a misguided attempt to create synergies between alcoholic beverages and juices. ConAgra scooped up RJR Nabisco's margarines gained from Kraft only three years earlier in a failed run at stealing leadership from Unilever.

RJR Nabisco's game of musical brands may not be over, either. The company, which sold its $50 million College Inn broth to Heinz this year because of a poor strategic fit, may jettison non-cookie/snack lines, possibly hot cereals, gelatin, A-1 steak sauce and Grey Poupon.


In the case of Vlasic, Campbell's chose the spinoff route because of lower profit ratios from Vlasic. Mr. Goldstein terms these brands "second-class citizens in the old world." Campbell's soup lines reeled in a margin higher than 20% of sales compared to Vlasic's 8% to 9%. Vlasic's rebuilding formula is to cut costs and funnel the savings into marketing.

Vlasic attributes its fiscal fourth-quarter loss of $24.1 million reported this month to years of neglected spending by Campbell's.

There is a danger the new generation of small companies created by brand spinoffs could start the brands-for-sale cycle all over again. "We'll be a billion dollar company next year," notes Aurora's Mr. Wilson. "One of my great fears is that we'll get so big we'll create our own orphans."

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