The new story is about SnackWell's sales falling from their high of $400 million-plus annually and Nabisco executives being worried enough to add fat to what is a no- or low-fat brand. Talk about desperation. And poor planning. It also seems Kellogg Co. was somewhat taken aback by a sales slump for its product line, a 10% slide for cereals.
Were these food marketers paying attention? Generally, growth in these businesses follows population trends, it is said. With population growth at about 1%, it shouldn't take a genius to figure out something special is required to stay ahead of the game in the 1990s.
No one should be startled by the answer suggested in a new study by Information Resources Inc.: It reminds us that it's new or improved products that generate the sales bounce top managements want. And standing pat with an existing product lineup -- however marvelous its past -- invites slowing growth. According to IRI, of the 160 brands sold via food, drug and mass merchandisers that had at least 10% growth last year, 33% were totally new products. Another 36% were enjoying such "outstanding" success because of line extensions.
Another popular avenue to growth is premium products, with, for example, new technology driving a 45% sales jump over the 52 weeks ended March 1 for Tenneco's food-storage brand, Hefty OneZip. So it's no wonder Gillette Co. is willing to invest $300 million on the marketing of its new, advanced -- and higher price -- men's razor (even though its popular Sensor brand, a 1990s introduction, is still relatively new).
Staying ahead, plainly, is not for the squeamish. The IRI data reveal that, of 77,000 new items put on store shelves last year, 76% of them brought in sales of less than $10 million. Only 1% managed to reach the $50 million sales mark -- far short of success. For CEOs who have to approve the budgets for new-product development, and then the marketing dollars to promote new items, these decisions can be wrenching. Gillette is said to have spent twice its expected marketing expenditure to develop its new razor. But if watching the bottom line takes a marketer's eye off the R&D allocation, potentially more-wrenching decisions lie ahead.
The sale of hal riney & partners to France's Publicis brings with it the urge to fret once again about the future of the independent advertising agency. With other proud indies -- such as Hill, Holliday, Connors, Cosmopulos and Carmichael Lynch -- signing on with holding company mother ships, and the hunt still on for more deals, a little handwringing is in order. But not much.
Despite today's mantra of the global imperative, new independents will come along -- and are out there right now, where the business emphasis is not on having offices from Singapore to Moscow but on making great creative advertising in this country. There will still be admen and adwomen willing to leave the womb of the big shops, as Hal Riney left Ogilvy & Mather's years back, to pursue a dream and practice their own particular vision of advertising. And, despite "world markets" and "global brands," there will be significant advertisers that seek them out when the work they produce, the service they offer, is right for the times and the market. And, in the way the world works, some day some of them will also cash out and sell.
So the news last week was that Hal Riney sold his shop. But not before he built a $700 million agency. That's a nice run in anyone's book. Now, who's next to build an agency as he did?