TOP-TIER EXECUTIVES TAKE CONTROL OF FOOD MARKETING. GROCERY PRODUCTS: MATURE INDUSTRY SCRUTINIZES AD AGENCIES

By Published on .

Most Popular
Marketing power is scaling higher up the corporate ladder as the executive suite at food companies takes a more active role in ad decisions to drive lagging earnings and volume.

In fact, the food triumvirate in this year's Power 50-Kraft Foods' President-CEO Robert Eckert, Kellogg Co. President-Chief Operating Officer Carlos Gutierrez and Frito-Lay President-CEO Steven Reinemund-were all intimately involved in major agency shifts or consolidations this year.

The fact that the top-tier management is scrutinizing marketing plans reflects the harsh realities at food companies, where price hikes are more difficult to make and significant volume gains tougher than ever before to achieve.

A MATURE BUSINESS

"We look at the food industry in general as growing with the population," says Mr. Eckert, who leads the largest food marketer in the U.S. with $16 billion in sales. "People don't wake up in the morning saying, `I'm going to eat an extra 10 things today.' So our business is a mature business."

Mr. Eckert, 44, controls the biggest budget of the three-$800 million-plus-and helped engineer a rare agency consolidation in March that saw Grey Advertising, New York, dropped from Kraft's creative roster. A total of nine assignments were shifted and Grey lost $100 million in creative for brands such as Post, Kool-Aid and Minute Rice.

In addition, Mr. Eckert and his team took the unusual step of eliminating commissions for "non-working media," including production, talent and residuals.

REPOSITIONING

Under Mr. Eckert, Kraft is taking a leading role in trying to position itself as a helpful, one-stop resource for all consumers' mealtime needs. To that end, the company last month broke a $50 million umbrella advertising effort from J. Walter Thompson USA, Chicago. It is themed, "Kraft Foods. We make it taste good, but you make it feel good."

Newly installed as president at beleaguered Kellogg, Mr. Gutierrez wasted no time in making sweeping changes beginning with a stunning agency review three months into his new post.

"To improve our marketing effectiveness in the U.S., we must strategically align our marketing activities with our growth plan," says Mr. Gutierrez.

When he announced the review, he indicated Kellogg might add one agency to its existing roster- Leo Burnett USA and Burrell Communications Group, both Chicago, and J. Walter Thompson, USA, New York. The agencies asked to pitch: Ammirati Puris Lintas, BBDO Worldwide, Grey Advertising, Lowe & Partners/SMS and Y&R Advertising, all New York, in addition to the Martin Agency, Richmond, Va. But Y&R later dropped out of the competition.

But agency insiders believe some of Kellogg's $400 million in assignments may also be shifted among the company's current shops, particularly Burnett.

KELLOGG DOWNSIZING

Mr. Gutierrez is well-suited to rebuilding Kellogg's marketing, considering he acted as VP-sales and marketing for Kellogg USA. During in the midst of a three-month program begun in September to eliminate some of its 2,000 positions as part of a program of Mr. Gutierrez to unleash $100 million in funds for marketing to build its sagging share.

$200 MILLION CONSOLIDATION

Unlike the first two reviews, the Frito-Lay shift set into motion by Mr. Reinemund, 50, is global. After taking on some duties from Brock Leach, former Frito-Lay president-North America, who moved to president, Frito-Lay Development Group in July, Mr. Reinemund is keeping a closer eye on domestic matters including marketing.

Mr. Reinemund was integral to the competition between Y&R Advertising, DDB Needham Worldwide and BBDO Worldwide, which ended with a consolidation of the $200 million business at BBDO earlier this year.

That shop, not coincidentally, also is the agency for sister company Pepsi-Cola Co. The reasoning is that Pepsi and Frito plan to pool more resources from side-by-side shelf space to putting chips in vending machine cans to joint promotional ad and ad campaigns.

The program's name? The Power of One.

In this article: