The comeback trail

Two great comebacks will be made at Nestlé in about ten days’ time. On October 26, David Glik returns to the company after an absence of five years, this time as consumer marketing director for Nestlé’s UK food division, where he was previousl

Two great comebacks will be made at Nestlé in about ten days’ time. On October 26, David Glik returns to the company after an absence of five years, this time as consumer marketing director for Nestlé’s UK food division, where he was previously marketing manager (MW October 8). On the same day, the company will launch a comeback for its biggest food brand, the 140m Crosse & Blackwell range.

It will take the form of a 7m umbrella ad campaign aimed at extending C&B’s brand franchise across products spanning packet, frozen, bottled and chilled foods. Glik will take charge of the C&B campaign, which will launch two new products.

Some things have not changed since Glik last worked for Nestlé. Crosse & Blackwell still has a somewhat downbeat image, and McCann-Erickson is still Nestlé food’s main advertising agency.

But many things are different at the food division, and indeed, right across the Nestlé group. There is a new management team, stretching from Peter Brabeck, who became chief executive at the head office in Vevey, Switzerland last year to

Peter Blackburn, who became UK chairman and chief executive last November. And, since Brabeck took the helm, the company has adopted a more aggressive stance in building markets and launching new products.

As David Barlow, new director of category development at the food division, says: “The whole of Nestlé is on a growth track, in beverages and confectionery there is a push for growth. Before we got into key markets and built the business through acquisitions. With this in place, we are pushing for organic growth.” He says Blackburn is “firing us up to go for growth”.

Food accounts for about one quarter of Nestlé’s UK turnover, while beverages make up 30 per cent and confectionery accounts for 45 per cent.

Glik explains his reasons for returning: “I look at some of the bold decisions that have been made recently – whether over brand names, new product development or upweighted levels of support. This is encouraging for the prospect of building core brands within the food division.”

There has been considerable management change at the company in the UK over the past year, in line with the new aggression emanating from Vevey.

Since his appointment in June 1997, chief executive Peter Brabeck, a former Findus frozen food marketer, has started to make the company less reactive and more pushy across the globe in its distribution deals, its relations with suppliers, and in new product development.

Food manufacturing analyst John Campbell of Rabobank International says: “He is a new broom and the company will be more aggressive than in the past. I believe his impact is as significant as that of (Maurice) Tabaksblat and (Niall) FitzGerald at Unilever. Nestlé has been very conservative, and it is trying to balance this with a new aggression.”

This new mood can be seen percolating down to Nestlé UK’s food unit, with a greater emphasis on new product development, particularly in its focus on building categories rather than just launching single products.

Nestlé’s total sales rose nearly 16 per cent last year to $48.3bn (29.2bn) though net profits as a percentage of sales were virtually static at 5.7 per cent.

In the UK, Peter Blackburn was appointed as overall boss in November, taking over from David Harris who stood down for health reasons. Blackburn returned from France, where he was president directeur-general, with a determination to build Nestlé’s position in the UK. France is Nestlé’s second largest market after the US; the UK its fifth with sales of Swiss Fr3.9bn (1.6bn) last year.

Since Blackburn’s appointment, managing and marketing directors across Nestlé’s UK divisions have been replaced. Some observers speculate that these changes have been part of a new policy of “Europeanising” Nestlé’s management.

Part of the latest shift in UK senior management has come since Nestlé’s acquisition of Spillers

Petfoods last year. Blackburn has plucked commercial director Rob Murray and put him into the food division as managing director (MW August 13) With Glik also on board, there will be a new round of activity on Nestlé’s food brands.

Nestlé UK’s food division is a ragtag assortment of dated brands operating in categories of limited growth potential. Its products are often to be found skulking in the bottom corner of UK supermarkets shelves. Along with Crosse & Blackwell, Glik and Murray will oversee the Buitoni pasta range, Branston’s pickle, Sunpat peanut butter, Gale’s honey and the Nestlé chilled desserts range.

In reality, Nestlé’s UK food division has been neglected since Glik last worked for the company, as other areas with higher margins and greater excitement such as mineral water, coffee and confectionery became the focus of the company’s attentions.

The food division has operated in stagnant sectors such as tinned, bottled and packet products which have been under attack from retailer’s own labels. Tinned and bottled foods, once the staple of the post-war British diet, are now seen as downmarket and outdated. For the old brands once associated with these areas, such as Heinz and Crosse & Blackwell, the task of moving into the new growth areas like frozen ready meals has been a painful and expensive process.

The task of relaunching Crosse & Blackwell first began about five years ago, with a commitment to spend 30m on the project. This has included bringing the Findus frozen food brand under the C&B heading.

The new ad campaigns through McCann which break on October 26 co-incide with the launch of three products under the Crosse & Blackwell name. New York Take Out is a range of frozen ready meals in a box; SnackStop “kettle snacks” (just add boiling water) will compete with Pot Noodle; and Creations will, we are told, “shake up the packet recipe mix sector”. If ever a sector needed shaking up, this is surely one.

Richard Zambuni, managing director of consultancy the Value Engineers, has doubts about the prospects for Crosse & Blackwell’s relaunch. He says: “It’s like taking a seven stone weakling and giving him a body-building workout and steroids. C&B is a brand and has a franchise, but it is relatively dated. It hasn’t been at the cutting edge. Nestlé is a long-term big brand builder, but it is a risky strategy.

“They are the kinds of brands linked with the Sixties and Seventies. Look at how difficult Heinz has found it to get out of cans and bottles and get into chilled and frozen. It has done it with Weight Watchers, but even the leap into freezers was difficult.”

But Barlow believes the new structure of the food division will enable the brands, including C&B, to push forward. Creating the position of consumer marketing director to oversee strategic brands such as C&B and Buitoni leaves Barlow to concentrate on other brands such as Gale’s and Sun-Pat, to deal with own-label production and to work with retailers to develop categories. A new division for food on the move will tap into snacking trends, he says.

With Buitoni, Nestlé has the strongest brand operating in the dried pasta sector, but it is an area dominated by own label. Attempts to push Buitoni into fresh pasta and pasta sauces have met with limited success. As Barlow says: “We haven’t made the breakthrough we hoped for in the Buitoni chilled market.” Buitoni has committed 4.5m to push the brand’s Italian credentials through advertorials and radio sponsorship.

But with Gale’s, the honey brand, and Sun-Pat peanut butter, Nestlé has much work to do. They may dominate their categories, but these are small categories with little room for growth. As part of the new-look food division where consumer marketing has been split from category management, Barlow has switched from general manager for ambient food to director of category development. This will be crucial in trying to leverage the brands into new categories or developing the existing categories. Chilled yogurts, branded under the Nestlé name, also have possibilities for extensions into other areas of the chiller cabinet.

There is still the prospect of further acquisitions. The company has grown over the past 15 years with a policy of making purchases in areas where it is not dominant. It bought Rowntree in 1988, Perrier mineral water in 1992 and petfood brands Alpo and Spillers in 1994 and 1997 These were opportunistic purchases, but have helped Nestlé nearly double its size over the past ten years.

Food industry observers say they would not be surprised if Nestlé made an “infill” acquisition in the food area should an opportunity arise in the UK or Europe. This could mean the C&B range is extended into new areas.

One advantage C&B has is that, as an established brand, many younger consumers will not be old enough to remember its association with tinned foods. “It is like launching a completely new brand,” says one observer. This gives a clue to the positioning of the New York Take Out range.

Brand manager Catherine Smith says: “UK consumers are attracted to and motivated by the American ‘big city’ lifestyle, particularly now with the influence of TV shows like Friends.” This is an attempt to target young professionals, barely old enough to remember the last oil crisis, let alone C&B baked beans.

One thing is for sure, Nestlé has acquired more brands than it has sold over the past 15 years. The UK food products are safe in the Nestlé larder, though Blackburn’s determination to improve the UK’s performance will put pressure on Murray and Glik to give C&B and the other brands an updated image.

It is an unenviable task, but Nestlé is a long-term brand builder – much to the consternation of investors out to make a quick Swiss franc. Given the company’s resources and determination to take a long view of brand-building, October 26 could be the start of a big comeback for a selection of old-time brands.

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