Alberto-Culver Slashes Spending but Still Grows, Thanks to Strong Brands

Amid Recession, Marketer Stepped Up Trade Promotion, Price Cuts

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Source: TNS Media Intelligence

BATAVIA, Ohio (AdAge.com) -- Amid a U.S. economy that shrank 6.1% last quarter and a global personal-care business hit surprisingly hard by recession, Alberto-Culver Co. managed to post 6.3% organic sales growth, including 5.2% in the U.S.

But unlike Reckitt Benckiser, another package-goods player with surprisingly strong first-quarter sales, Alberto-Culver cut ad spending 14.5% instead of hiking it.

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Alberto-Culver thrived despite less media for several reasons, including hiking spending on its two strongest brands of recent years, Tresemmé and Nexxus, by double digits despite the broader decline, said CEO V. James Marino on an April 30 earnings call.

Globally, 7.5 points of the 14.5% decline came from foreign-currency impact, which also reduced the company's reported sales 10.1 percentage points to a 1.4% decline, said Mr. Marino.

The rest came from a shift to trade promotion, lower media rates and lower spending on St. Ives, which has struggled despite a relaunch last year. The brand will get another makeover later this year with a new marketing team and a new agency, Mr. Marino said.

Move to Wieden
Wieden & Kennedy, New York, which also picked up Alberto's recently acquired Noxzema brand, will be the new St. Ives agency, a spokeswoman said, in a move designed to align the entire skin-care business with one shop.

St. Ives got $21 million in media support last year, according to TNS Media Intelligence, within an overall Alberto outlay of $122.5 million.

Campbell Mithun, Minneapolis, was incumbent on St. Ives but continues on Tresemmé and Nexxus, which got a combined $83.3 million in media. Aegis Group's Carat, New York, handles media planning and buying, and Omnicom Group's Element 79, Chicago, handles Mrs. Dash.

The Alberto V05 brand, once a flagship, "is not active in media." Somewhat surprisingly, despite the recession, value-priced personal care brands like Alberto and Suave haven't seen a huge boom, in part because higher-end brands are benefiting from trade down by salon consumers while mid-tier and premium mass products have stepped up promotion.

Though the company plans to step up ad spending as a share of sales this quarter and next, Mr. Marino acknowledged that the imperative to price promote is hard to ignore because all marketers are doing more.

"Consumers, for better or for worse, are being trained to buy on promotion," he said, "not just in our category but in all categories."

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