Nabisco Holdings, Parsippany, N.J., announced a sweeping restructuring anticipated to yield $100 million a year in ongoing annual savings. The savings will fund a 30%-plus increase in advertising and consumer promotional expenses for cookies and crackers in the second half.
Nabisco said the plan, which involves a restructuring charge of $406 million and related expenses of $118 million, will "significantly reduce" anticipated 1998 earnings. Details about expected job cutbacks and facility closures were not disclosed.
"While we have made good progress on several fronts, our volumes, sales and earnings for the first half are stalled," said President-CEO James Kilts. "These ongoing performance issues made it clear the time for action is now."
Among the immediate priorities are new advertising campaigns for Ritz, Air Crisps and SnackWells, and larger ad commitments for Oreo, Chips Ahoy! and Triscuit. The company said it would introduce in the second half "a number of new seasonal items." It wouldn't identify the items.
McCann-Erickson Worldwide, New York, handles crackers; Foote, Cone & Belding, New York, has cookies.
The company is also stepping up plans to "discontinue certain product lines." It didn't identify the product lines. Nabisco is said to be shopping around some non-core buinesses, including hot cereals, A.1. steak sauce, Grey Poupon mustard and Parkay and Fleischmann's margarines.
On the sales side, the restructuring plan calls for "restoring the effectiveness" of Nabisco's store-door delivery service, which has struggled since a 1997 revamp. Following that overhaul, sales for Nabisco Biscuit fell 4% last year and continued downward in the first quarter, dropping 1% vs. the first quarter of 1997. To fix the problem, Nabisco said it will assign a single customer service representative to specific stores that will have "full-line accountability for in-store activity." In addition, new sales force compensation and training programs are planned.
Copyright June 1998, Crain Communications Inc.