The $510 million purchase of Alpo Petfoods from Grand Metropolitan's Pillsbury division would make Nestle's Carnation subsidiary a strong No. 3 player with Friskies cat food and Alpo dog food.
"It really pushes the combination Nestle/Carnation group into the forefront of category leadership," said Burt Flickinger III, a management consultant with A.T. Kearney, New York. "Rather than having another divide-and-conquer approach, they can take a unified approach. It gives them the equity to better manage a category under siege."
Nestle last week would say little about plans for Alpo, pending the deal's completion.
The Weightman Group, Allentown, Pa., has been Pillsbury's agency for Alpo. Dailey & Associates, Los Angeles, is Carnation's agency for Friskies and Mighty Dog, and McCann-Erickson Worldwide for Fancy Feast.
Pillsbury spent less than $1 million on Alpo advertising last year after spending $5 million in 1992, bringing speculation the company might be shopping the brand.
"Our objective is to maintain No. 1 or No. 2 positions in our major businesses, which we have achieved. Alpo has been the exception where, in aggregate, we occupy the No. 7 position in the highly competitive U.S. pet food market," said Pillsbury CEO Paul S. Walsh.
"The sale of Alpo generates the best value for Grand Met shareholders and provides new investment opportunities. It will bring even more focus to our branded consumer food business," he said.
The Alpo-Friskies combination would trail Ralston Purina Co. and H.J. Heinz Co.
The combination could force some consolidation or at least some stratification of brand names. Carnation has a dog food line under the Mighty Dog brand while Alpo has a cat food that features cartoon cat Garfield on the label.