Can Mars bridge gaps in merger?

Industry observers are divided about the merits of consolidating Mars’ European business, but they are all asking the same question – how will its petcare division fit with confectionery and food?

Mars’ decision to merge its food, petcare and confectionery divisions across Europe – and eventually in the UK – has split the marketing industry.

Mars UK says the decision to pool the businesses was taken to strike at the company’s international competitors in food and confectionery, such as Nestlé and Unilever.

The move also coincides with plans to create a single European market and highlights the company’s belief that its consumers’ needs are the same across the Continent.

But the combination of food and confectionery with petcare is baffling some industry observers.

The company has not confirmed a timetable for bringing the UK into line with the Continent, but Mars Confectionery will eventually merge with Pedigree Masterfoods, which produces Whiskas, Kit-e-Kat, Pedigree and Pal, along with Dolmio and Uncle Ben’s sauces.

Mars plans to appoint European co-presidents as part of the reshuffle, with veteran of its US and Europe marketing operations David Fish and Pedigree Masterfoods president Dick Raper tipped to take up the posts.

The top UK positions have been filled by Mike Davies, vice-president for petcare and food, and Bill Ronald, who remains in his post as vice-president of snack food (confectionery).

The company was finalising its renewed marketing strategy as Marketing Week went to press and refused to comment further.

Some sources believe new global marketing chief Ken Rogers – who left his post as vice-president of Mars’ European confectionery business to move to the company’s US headquarters – is likely to take a strong hand in influencing future campaigns (MW last week).

But other sources say Rogers’ replacement, former Mars France snack food unit manager Martyn Wilks, will want the new European organisation to stand on its own feet without interference from the US.

Wilks will work alongside European petcare vice-president Ann Francke, who is drawing up a pan-European petcare marketing strategy.

One advertising agency source believes Mars may try to globalise ad campaigns further, following the success of rebranding Marathon to Snickers. The company is attempting to increase market share of M&M’s outside the US, where it is the number-one bagged sweet brand.

The agency source said: “All the advertising in Europe used to go through Rogers and head of European advertising Tom Jasinski, and I think that will continue.

“I don’t think it will be a case of sending US campaigns across the Atlantic, although that can sometimes work. Mars will want to make use of creativity in the UK and adapt campaigns for different European markets.

“I can’t imagine it marketing all three sides of the business together. They’re too different.”

If Mars’ new marketing strategy remains open to speculation, the confirmed corporate changes across the UK and Europe are already puzzling City analysts.

One analyst says: “The only visible benefit appears to be an improvement in distribution. Tastes across European markets are very different, whether you’re selling products for animals or people.

“It’s all very well Mars saying it will tackle competitors such as Nestlé and Unilever, but they are only rivals in food and confectionery.

“If Mars starts laying down too many controls by merging all its businesses – and therefore also its marketing and management strategies – it may streamline communications, but could lose the creativity available in different regions.”

The analyst claims continental Europe is being used as a test-bed before Mars initiates similar mergers in the UK and US, where its business arms are also separate. “It is using Europe as a prototype,” he says.

“I think the company also realises that the UK market is very different from mainland Europe. It is being quite sensible by waiting to see what happens in places such as France and Germany.

“But I don’t see any correlation between petfood and confectionery.”

A conflicting view comes from Gianni Montezemolo, the author of a new book, Europe Incorporated: The New Challenge, which predicts Europe will replace the US as the world’s economic superpower.

Montezemolo, former European chief executive for home hygiene giant SC Johnson Wax, and now a director at management consultancy AT Kearney, claims Mars has realised the importance of the European market.

He says: “Before the advent of the euro it was acceptable to run separate companies in different European companies Ãâ but not any more.

“Generally speaking, Mars is doing the right thing by merging divisions to squeeze profits out of them.

“I think the only disadvantage would be how to market so many different brands across all the countries. It may lead to a reduced product range.

“Mars should be careful about how it pulls the markets together. But I wouldn’t be surprised if it was talking about merging its US businesses, if the plan is successful in France, Germany – and then the UK.”

Mars will hope confusion surrounding its motives for the restructure, and its future marketing strategy, will be ironed out by more senior appointments and the creation of a pan-European marketing framework.

But it remains to be seen whether the decision will ultimately prove successful, or if the merging of confectionery, food and petcare will hit European sales.

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