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Leading marketers are dumping their marginal brands at a feverish pace as they focus on the top performers in their portfolios.

Last week alone, Campbell Soup Co. said it would spin off Swanson frozen foods, Vlasic pickles and five other "non-strategic" businesses into a separate, publicly traded company. And Dow Chemical Co. said it is exploring various options for its consumer brands unit, home to such brands as Ziploc and Saran Wrap, including a sale. Both moves follow Procter & Gamble Co.'s decision to put Duncan Hines on the block.

Analysts and marketing industry observers say the sales and spinoffs aren't a sign that brands are fading. Rather, they represent a move by marketers to focus on core brands and an unwillingness to support those that don't offer large-scale manufacturing, distribution and advertising synergies.


"Brands are just as important as they always were, as is brand stewardship," said Burt Flickinger, consultant at Reach Marketing. "The problem is sustaining them if they can't hold the position of No. 1 or No. 2. [Retail] chains are carrying only the top brands and once you hit No. 3, media buying efficiency and marketing spending drop."

Campbell's spinoff of business with a combined $1.4 billion in sales is being done so the marketer can "focus on our most profitable businesses with the highest growth potential," said CEO Dale Morrison. Those brands include Campbell's soup, Pepperidge Farm, Pace, Prego and V8.

"All these companies are in the same position. They work week to week, quarter to quarter, year to year to please Wall Street," said Paul Mulcahy, a marketing consultant and former Campbell ad boss. "If profits go down, shareholders scream blue murder. It's sheer greed."

The rationale behind Dow's move was that its DowBrands unit isn't a good strategic fit with the rest of the company. Dow also retained Goldman, Sachs & Co., a spokeswoman said, because it questioned whether DowBrands is large enough to compete effectively in the household goods marketplace.


Dow's consumer brands are too small to achieve the sorts of manufacturing and distribution efficiencies that bigger rivals like P&G-or even Clorox Co. and S.C. Johnson & Son-can achieve, agreed Michael Grant, an analyst with J.P. Morgan Securities.

William Steele, an analyst with Buckingham Research Group, sees growing pressure industrywide for smaller brand groupings like DowBrands to merge with larger or similar sized rivals to be able to compete with the industry giants on distribution.

Johnson and Clorox, in fact, are seen as possible DowBrands suitors, analysts say, although both could face antitrust issues. Unilever tops the list of potential buyers, according to Mr. Grant and Carol Warner, analyst with Montgomery Securities. Unilever is flush with cash from the sale of its chemicals business and earlier this year was rumored to be interested in a buyout of Reckitt & Colman.

Colgate-Palmolive Co. and Dial Corp. also are possible buyers.


But Mr. Grant said finding a buyer for second-tier brands may be difficult since all big consumer-products companies are moving to eliminate marginal units.

"From their point of view, these brands shouldn't be around 10 years from now," he said.

The hurdles to finding a buyer may be why Campbell is spinning off Vlasic and Swanson, brands long rumored to be on the block. While Vlasic, a $249 million business, according to Information Resources Inc., is actually the leader in shelf-stable pickles, the brand has gotten little marketing support in recent years and competes in a slow-growing category with little room for product innovation.


Swanson, with $194.6 million in sales, has dropped to fifth place in its category and has also gotten anemic ad support (see story on Page 4).

"Second-tier brands become milked, then they stop being brands and become products," said Tom Lawson, managing partner at Arnold Communications, Boston.

Ironically, second-tier brands aren't being advertised strongly, which is a major contributor to their decline.

"The reason these brands are dropping to No. 3 and 4 is because companies are putting 75% and up of their budgets into trade promotion," said Mr. Flickinger.

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