NEW MILLER CEO GIVES AGENCIES A CHANCE: FALLON, WIEDEN GET 'OPPORTUNITY TO DRIVE' BRANDS

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The broom that swept clean Miller Brewing Co.'s executive suite is sparing its agencies-at least in the short term.

Despite widespread speculation among ad industry executives and Miller distributors to the contrary, new Miller President-CEO John Bowlin maintained the brewer's two key $180 million ad accounts will not automatically be put into review.

" Fallon and Wieden are our agencies of record, and they will be given every opportunity to drive us forward," said Mr. Bowlin, 48, who nonetheless admitted some recent campaigns were off the mark.

ADS CAME UNDER FIRE

Fallon McElligott, Minneapolis, and Wieden & Kennedy, Portland, Ore., had created campaigns that came under fire from distributors for Miller Lite and Miller Genuine Draft, respectively.

Also on the Miller roster is Square One, Dallas. Starcom Worldwide, a unit of Leo Burnett Co., Chicago, is media agency of record for Miller.

Although Fallon's "Dick" campaign had a role in last week's ouster of three top executives, Miller's woes went much deeper. Industry executives said that under Mr. MacDonough, Miller lost strategic focus and alienated distributors in contractual matters.

Parent Philip Morris Cos. replaced John MacDonough, chairman-CEO; longtime VP-Sales Chris Moore; and Jack Rooney, VP-marketing, whom Mr. MacDonough hired in 1997.

LITE HAS SUFFERED MOST

As the company's biggest brew, Miller Lite has suffered most, first from lack of attention and then from the company's advertising woes.

"Beer industry veterans looked at [Miller Lite's 'Dick' campaign] and said, 'This has no chance of working,' " said one ad executive experienced in beer marketing. "It violated every convention in the business. You don't have to be stupid and insulting to be breakthrough."

In 1998, Lite's shipments fell 1.8%, according to Beer Marketer's Insights, to 15.9 million barrels, while Anheuser-Busch's Bud Light grew 13% to 26.1 million barrels.

After initially resisting pressure to drop the "Dick" campaign, Messrs. Rooney and MacDonough eventually placed Lite in review, but ended up changing the campaign rather than the agency.

Mr. Bowlin said the new Miller Lite work "shows promise" and noted that campaigns for Fosters lager, Icehouse and Miller High Life are "meeting the hurdle" of delivering "world-class advertising."

DISTRIBUTORS: BETTER ADS A MUST

Even so, distributors believe Fallon, at least, is unlikely to enter fall-let alone what the brewer has dubbed the Millerennium-as a Miller shop.

"The company has to make wholesale changes. Advertising has to improve," said one distributor who asked not to be named. "It can't get worse."

Stock analysts said Philip Morris took the unusual step of replacing all three top managers to ensure it keeps its options open for Miller, and also so it can capitalize on the assets it's purchasing from Stroh Brewery Co. and Pabst Brewing Co. The purchase closes at week's end.

"Right now they don't plan on selling Miller, but there might be some point in the future," when they will, said Merrill Lynch analyst Manny Goldman. "But to do that, you need a business as healthy as possible."

EXECUTIVE LINEUP

Mr. Bowlin, an ex-Oscar Mayer Foods executive who was president-CEO at Kraft Foods International, is actually returning to Miller; he served as its president-chief operating officer from 1993 to 1994.

Bob Mikulay, 47, Philp Morris USA's senior VP-marketing, who helped steer Marlboro cigarettes through the "Marlboro Friday" price cut, takes on the post of senior VP-marketing at Miller.

Jim Mortensen, 41, who as VP-trade marketing has been in charge of PM USA's successful, if controversial, Retail Master's trade program-now being challenged in court by rival R.J. Reynolds Tobacco Co.-takes on the post of senior VP-sales and distribution at Miller.

"They brought in the heavy artillery . . . the person whose mission was to turn around Kraft Foods International," said Mr. Goldman, who called Mr. Bowlin "a first-class Mr. Fixit."

At Miller, Mr. Bowlin is assuming management of a company half the size of Kraft Foods International.

"Emotionally, I really enjoyed my [previous] 15 months here and have an emotional attachment to Miller," he said, explaining his willingness to move back. "Further, there is a corporate priority. PM is very proud of Miller and its performance has been stagnant."

CHANGE SPARKS MORE CHANGE

The management shifts at Miller created other shifts throughout Philip Morris.

At Miller, Richard Strup, an ex-Miller marketing chief, adds responsibility for company strategy to his current duties as senior VP-international.

At PM USA, Nancy Brennan Lund, 46, moves to senior VP-marketing, from group VP-Marlboro and new products. Michael Mahan, 44, moves to VP-Marlboro, from VP-Marlboro promotions.

At Kraft Foods International, Roger K. Deromedi, group VP, was named president-

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