The marketer said it will increase media budgets by 50% for the eight brands on which it now spends well over $100 million a year. The brands-including Lipton, Hell-mann's and Ragu-account for 83% of sales.
The strategy is part of the plan to integrate Unilever's brands with the Best Foods lines it acquired in October 2000. It also fits with the strategy of other leading food companies, including Kraft Foods and Hershey Foods, to focus more marketing resources on fewer brands.
"From an efficiency, effectiveness and leverage perspective, this is a direction [in which] food companies almost have to go," said Credit Suisse First Boston analyst Dave Nelson. "It's exactly what has been lacking in the food industry for the past decade" as companies have let earnings drive brand strategy rather than vice versa, said J.P. Morgan Securities analyst Erika Long.
Unilever Bestfoods North America CEO Neil Beckerman acknowledged that, with the exception of Lipton, the company hasn't spent as much on its leading brands as it should. "We have not advertised at the right levels, and now we need to rebuild our equities and launch platforms for growth," he said. "Advertising is what gives consumers insight and connection with the products."
Since the Best Foods acquisition, the unit has been winnowing brands in line with parent Unilever's plan to narrow its roster of 1,600 brands to 400. The food division has divested nine brands so far, including Gorton's seafood and Entenmann's baked goods. Mazola oil is on the block, and the fates of another six brands-including Skippy peanut butter, Lawry's spices and marinades, and Promise, Imperial, Take Control and Brummel & Brown spreads-are being evaluated. The goal is to cut the Unilever Bestfoods North America lineup to a maximum of 12 brands, from 26.
The additional marketing investment for the top brands will be funded by proceeds from the sale of non-core brands and cost savings from the acquisition. Attention will be given to the unit's top four "powerhouse" brands, which deliver 60% of its $4.5 billion in sales, as well as four "jewel" brands that deliver a combined 23%.
The powerhouse brands are Lipton, the largest in the portfolio with more than $2 billion in sales from a variety of tea-based beverages and foods; Hellmann's mayonnaise (Best Foods in the West) and Ragu pasta sauce, which both have sales topping $500 million; and Shedd's Spread Country Crock, the category leader with $300 million in sales, according to the company's calculations. The jewel brands are Bertolli, a $200 million-plus olive oil; Wish-Bone salad dressings and I Can't Believe It's Not Butter, which both have sales topping $250 million; and Knorr, with current sales of roughly $150 million.
January through August of this year, the unit spent $100 million in measured media on the eight brands, according to Taylor Nelson Sofres' CMR.
Among efforts planned for Lipton beverages are a Lipton Brisk Lemonade and the test of a tea/fruit juice drink called Matica. WPP Group's J. Walter Thompson Co., New York, handles both.
The company will introduce Lipton Onion Dip and a line of Lipton Asian Side Dishes with ads from Bcom3 Group's Bartle Bogle Hegarty, New York. Hellmann's will be buoyed by the launch of a Just 2 Good low-fat mayonnaise and a honey mustard variety. Wish-Bone will be extended with a dual dressing-and-marinade line. Interpublic Group of Cos.' Lowe Lintas & Partners Worldwide, New York, handles Hellmann's and Wish-Bone.
New Ragu Robusto will get more advertising next year, from JWT, and Bertolli will be extended into the premium-sauce category as the company moves its Five Brothers brand under that banner. Bertolli's advertising was awarded to Bartle Bogle earlier this year.
Credit Suisse's Mr. Nelson took a wait-and-see attitude about the success of the new strategy, citing the two now-merged companies' "mixed track record" on innovation.