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STYMIED GERBER REVIEWS SHOPS FOR $20 MIL ACCOUNT; BABY FOOD GIANT STILL DOMINATES, THOUGH GROWTH SEEMS ELUSIVE

By Published on .

Facing share loss, bad publicity and a continual struggle to leverage its brand beyond baby food, Gerber Products Co. has thrown its potentially $20 million account into review.

Gerber wouldn't comment on the reason for the "invitation only" review other than to say "a final determination will be made over the course of the next few months."

HUSH-HUSH

The review is being conducted so quietly, in fact, that incumbent Noble & Associates, Chicago, was initially unaware the business was being shopped. That agency is being invited to pitch.

Other agencies are not known.

The reasons for the review aren't clear. The unit of Sandoz in April said it would reformulate its products to remove starch and sugar after the Center for Science in the Public Interest blasted the company over adding fillers to its baby food. Gerber's baby food sales fell 8.6% to $479.1 million for the 52 weeks ended Sept. 8, said Information Resources Inc.

The company's share of this market, which stood at 80.4% in 1994 and 76.9% in 1995, is down to 66.7%. Still, that far outdistances the 16.8% of its nearest rival, Ralcorp Holdings' Beech-Nut. Third-place H.J. Heinz Co.'s share stands at 11.1%.

Gerber is the only one of those to advertise significantly. Beech-Nut spent less than $2 million on advertising last year, according to Competitive Media Reporting, via Suissa Miller, Santa Monica, Calif., while Heinz doesn't have an agency of record for baby food.

Gerber's $20 million in measured spending for 1995 appears to be on the downswing; CMR puts '96 first-half spending at $5 million.

HURT BY ORGANIC FOODS

Industry observers believe Gerber has been hurt by the proliferation of organic baby foods, because it is the only one of the major players not actively pursuing this segment with new products.

Last year, Heinz bought Earth's Best, the leader in that segment; Beech-Nut has pursued organics with products under its own brand.

Gerber has been trying to expand its franchise beyond babies and toddlers to adults-a hard sell to consumers who associate the company solely with baby food.

"Why is it that Gerber is having trouble expanding when other companies can successfully extend a brand name?" asked Arvind Desai, an analyst with Mehta & Isaly, New York. "It could be the difference between having a dominant share in a relatively small category and a small share in a growing category."M

Contributing: Mark Gleason.

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