"We're not seeing the big increases in marketing that we were before" in the food industry, said Credit Suisse First Boston analyst Dave Nelson. The reason, he said, is that food companies are benefiting from lower ad rates as a result of the burst Internet bubble, so "they don't have to spend as much to be just as effective. To the extent that people are home more, they're in front of the TV more, and they're getting more eyeballs per dollar spent."
In fact, while food stocks outperformed the Standard & Poor's 500 index by almost 50% over the last year, ad spending for the 32 leading food companies fell 7% to $3.3 billion, according to research from Banc of America Securities analyst Bill Leach. Mr. Leach's Sept. 20 advertising trends report shows that Kellogg Co.'s spending on advertising year-to-date fell 27%, Kraft Foods' dropped 18% and ConAgra Foods slid 9%. Total category spending for major food categories such as cereal, soup and condiments fell 4% for the year.
Regardless of the amount of ad dollars they will spend, Mr. Nelson said food companies now "have a window of opportunity to regain some share from foodservice," and to do that they must connect their brand message with consumers' current focus on home, hearth, family and friends.
For the 52 weeks ended February 2001, the average American ate 3% fewer meals out than the year before, the biggest percentage drop since 1979, according to market research firm NPD Group. And recent events are expected to accelerate that trend (A A, Aug. 13).
Frozen foods marketer Schwan's Consumer Brands North America, known for frozen pizza brands Freschetta, Red Baron and Tony's, is gearing up its efforts to reach families, and is "optimistic [they] will be eating more stay-at-home meals," said Tim Cauley, VP-general manager.
Freschetta had already begun to position itself as a quality alternative to restaurant meals with the launch in March of a campaign featuring a group of celebrity chefs dubbed the Freschetta Culinary Council. Interpublic Group of Cos.' Campbell Mithun, Minneapolis, handles.
"Although spending [in restaurants] has slowed and started to decline, people's tastes and expectations are higher because of former restaurant habits, so we have to deliver to that expectation," said Tom Bierbaum, Freschetta national brand group manager.
For its Red Baron brand, Schwan's advertising come January will shift from a more adventure-seeking positioning to a family message, and Tony's will begin to make its Tony's Time program fostering child-parent relationships "a big part of its advertising thrust," Mr. Cauley said. The program has in the past offered parents an opportunity to ID their children through fingerprints and DNA.
Such programs, always a part of good community relations for food marketers, will likely take on a larger role in the wake of Sept. 11. Cadbury Schweppes' Mott's USA, for example, recently launched a national newspaper insert for its apple juices and sauces touting its $250,000 donation to national non-profit Save the Children to establish a program to educate parents and children about proper nutrition. Though the program was already planned prior to Sept. 11, a company spokesman acknowledged that "people might be even more aware now."
But while the clear marketing imperative now is to reflect how brands may help connect people, one food executive warns it may not be that simple. "Companies can't magically bring the wholesome, good family image to themselves if they don't already have it," said Pillsbury Co. Marketing Director Alan Cork. "People will look back to the brands that really count."
Credit Suisse First Boston's Mr. Nelson predicts marketers such as Campbell Soup Co. and spice manufacturer McCormick & Co. could be "beneficiaries of cocooning," as could Kraft Foods, which "in general has homey, wholesome-type brands."
Campbell last year brought back its well recognized "M'm! M'm! Good!" slogan, courtesy of Omnicom Group's BBDO Worldwide, New York, in the hopes of reconnecting consumers to its ailing soup line and "reminding them just what we meant to them: family, comfort, value," said a company spokeswoman.
Campbell CEO Doug Conant, bucking overall food industry trends, pledged in July he would put $200 million against new products and increased advertising and promotions, mostly surrounding its U.S. soup business.
In another case of connecting, Campbell's Godiva unit recently swapped product shots for pictures of people sharing chocolate in a print campaign from MDC Communications Corp.'s Marge-otes Fertitta & Partners, New York. Similarly, McCormick this month launches an integrated ad campaign that shifts creative focus from food shots to families in an effort to show how its spices bring people together in the kitchen. The campaign, from Sawtooth, Woodbridge, N.J., uses the tagline, "The taste you trust."
"Our new advertising is a deliberate attempt to truly express the brand and make the emotional connection between the brand, our product and consumers," said Michael Simon, VP-marketing for Godiva Chocolatier. "Using people is a better way to express the emotional need Godiva satisfies: showing someone you care, as well as taking time for yourself."