Mondelez International has shifted its global Halls creative business to Wieden & Kennedy, abruptly ending its relationship with JWT.
The WPP agency was terminated Tuesday in its London office. After being asked to work on Halls in other markets despite the eventual move of the entire account before the end of 2013, JWT resigned the rest of the business. It's the latest indicator of the expanding divide between the marketer and agency, and spells the end of JWT's 40-year relationship with Cadbury brands, which joined the Mondelez portfolio back in 2009. JWT recently lost the Philadelphia cream cheese account in Europe to BBH, and it is defending its Jacobs coffee account in Europe in a review. Those accounts represent combined revenue of between $5 million and $10 million to JWT.
Representatives for the WPP shop declined to comment.
Halls, which Mondelez counts as one of its "power brands," dominates the so-called medicated confectionery category globally, with 24.7% share, according to Euromonitor International. On the company's first-quarter earnings call, CEO Irene Rosenfeld called Halls a strong performer, noting that it was a standout in emerging markets, and that sales rose thanks to innovation and a rough cold-and-flu season.
JWT is not the only big network shop to recently lose business to Wieden & Kennedy. Earlier this year, W&K was handed Trident's U.S. business just 18 months after Publicis Groupe's Saatchi & Saatchi had won it. W&K also has the marketer's Stride gum brand. Halls, Trident and Stride are similar because they are typically sold at the front of stores and rely on impulse purchases.
A Mondelez spokeswoman credited W&K with having "an understanding of our brands."
The agency shifts come as Mondelez is finding its way as a stand-alone company with an emphasis on growth in emerging markets. (The company was formed last year when Kraft Foods split in two: Kraft Foods Group has North American food and beverage brands, and Mondelez's portfolio is dominated by global snacking and candy brands such as Oreo, Nabisco and Trident.)
In the first quarter, Mondelez reported that organic net revenue increased 3.8%, below its long-term target of 5% to 7%. Gum has been a weak spot. In a recent note to investors, Morningstar said, "Mondelez has struggled to gain the sales momentum the market expected." But "rather than uncovering fundamental flaws in the firm's operations, we think this lackluster performance is more reflective of growing pains as it carves a path as an independent company." Morningstar added that Mondelez's marketing spending and increased sales capabilites were encouraging.
But agency executives report that the changes have been fast and furious, with little notice or explanation. Adland's frustration with the marketer has grown since last week's announcement that Mondelez would extend payment terms for agencies to 120 days, meaning that it's possible for shops to be executing and delivering work without being paid for up to four months. Mondelez said it made the adjustment to "better align with industry and make sure we compete on fair grounds, while simultaneously improving transparency and predictability of payment processes."
JWT CEO Bob Jeffrey sent the following memo to staff after the Halls loss.
All -
Twenty-four hours ago, we received the news that Halls was terminating our relationship in JWT London, effective immediately. The business is being moved to Wieden without pitch. In addition, Halls indicated that the remainder of the relationship outside of Europe would be moved out of JWT by year's end.
Based on the situation, and the concern over taking a double-hit – one now in London and again later in the year across the rest of the world – we have made the decision to end our relationship with Halls across the entire network, effective immediately. This is being communicated to the client ASAP, and we anticipate details on the transition plan in the next 2 weeks.
We have been working extremely hard for this client, a relationship we have enjoyed for nearly 4 decades. By ending our relationship in London now, and asking us to work on the business through the rest of the year, ultimately, they have left us no choice.
At the end of the day, it is unfair to ask our teams – who have dedicated countless hours, and gone above and beyond the call of duty by sacrificing weekends, family time and devoting significant emotional and intellectual time -- to please a client that has not given us due respect. We cannot expect these teams to remain motivated, committed or inspired, or ask them to dedicate additional energy and capital, for a client that has indicated that our relationship would definitely be over by year's end.
While this is disappointing, we will pick ourselves up and dust ourselves off and channel our energy and efforts on new brands, organic growth and new opportunities.
Please cascade this information down to your offices and teams immediately.
Regards, Bob
