Nestle nears plan to cut underperforming brands

Oct 1 (Reuters) - Nestle hinted on Tuesday it was getting closer to disposing of bad brands and shaking up its portfolio to deal with businesses that have underperformed for too long.

The company's chief executive Paul Bulcke told investors Nestle had drawn up lists of businesses that could be fixed and those that could not.

"Divestitures, we're going to have some," Bulcke said. "We want to be inbusiness, not in agony."

"The shortlists are there and now the action has to come. The timelines have to be wise, but action will come," he told a presentation to investors, stressing that managing the portfolio was a top priority.

Without identifying specific brands, Bulcke said some had been "sailing under the radar screen for too long without being part of the party."

Suggesting the process is already under way, sources told Reuters last week that Nestle's PowerBar energy bars were up for sale.

Nestle's performance in recent quarters has lagged some peers, in part because of the company's mammoth size and multiple brands, from Gerber baby food to Perrier water to Nescafe coffee to name only a few. The company posted 92.2 billion Swiss francs in annual sales last year and has 203.81 billion Swiss francs ($225.16 billion) in market capitalization.

Bulcke said other priorities included structural efficiency and scaling back capital expenditure. Moving ahead, Nestle's capital expenditure should be around 4 percent to 5 percent of sales, he said, below 2012's 5.8 percent.

After consumer goods rival Unilever warned on Monday of a sharper slowdown in its emergingmarkets, Bulcke acknowledged that sales in the region were slower than before, but added that growth was more stable than before. A degree of slowdown was healthy, he said, given that the double-digit rates in some markets, like China, was unsustainable.

Bulcke declined to comment on Nestle's plans regarding its closely-watched 30 percent stake in L'Oreal beyond repeating that all options were on the table. Restrictions on selling the stake expire in April.

Nestle shares were down 0.6 percent at 62.85 euros at 1122 GMT.

View Full Article in:

 Reuters · Wall Street Journal (tiered subscription model), The

Kraft Restructures as It Eyes More Brand-Building

Kraft Restructures as It Eyes More Brand-Building: Food Giant Will Separate Meals and Desserts From Snacks and Sauces

Nine months after Kraft Foods split in two, one of the new companies is restructuring as it looks to boost brand-building.

Kraft Foods Group, which was formed in October as a North American food and beverage business, today said it will divide its grocery division into two units: one focused on meals and desserts and the other housing snacks, sauces and dressings.

The change means Kraft, as of July 1, will have six divisions: beverages, cheese, refrigerated meals, international and foodservice and the two new ones: meals and desserts and “enhancers” and snack nuts. The move is meant to put more focus on brand-building and simplifying the portfolio, which has many brands and categories, the company said in a statement, referring to the former grocery division, which will be eliminated.

Under the new setup, each of the units will have an exec VP reporting directly to Kraft Foods Group CEO Tony Vernon.

Michael Osanloo, exec VP of the soon-to-be defunct grocery business unit, will be promoted to exec VP-president of meals and desserts, which will include Cool Whip whipped topping, Jet-Puffed marshmallows, Jello, Kraft Mac & Cheese, Shake 'N Bake, Stove Top stuffing mix and Velveeta dinners and meal kits. Together, those brands spent $69.3 million on measured media in 2012, according to Kantar Media, or about 11% of Kraft’s total $614.8 million in spending.

Jane Hilk, senior VP of marketing for Oscar Mayer, will take over as exec VP-president of enhancers and snack nuts, which will include A.1 steak sauce, Grey Poupon , Kraft and Bulls-Eye barbecue sauces, Kraft and Good Seasons dressings, Kraft and Miracle Whip spoonable dressings and Planters nuts, trail mixes and peanut butters. Those brands spent a combined $47 million on measured media last year, according to Kantar, or nearly 8% of Kraft’s total.

Oscar Mayer, one of Kraft’s largest spending brands at $105.8 million in measured media, is housed in the refrigerated-meals division, which will continue to be overseen by Nick Meriggioli

Marketing for all of the divisions will still be led by Kraft Chief Marketing Officer Deanie Elsner, who was promoted to the role in January. She has already overseen some agency changes, including recently moving the Philadelphia brand to Roberts & Langer DDB to Roberts & Langer DDB from McgarryBowen. “We appreciate [McgarryBowen’s] work on the brand the past four years and wish them continued success as they continue to support other Kraft brands now and in the future,” said a Kraft spokeswoman.

McgarryBowen still has Miracle Whip, Oscar Mayer and Lunchables, the company confirmed.

Kraft Foods Group was formed in October, when Kraft Foods Inc. split into two companies. The other company is Mondelez International, which houses global snacking and candy brands such as Trident, Cadbury and Oreo.

Original article written by E.J. Schultz for AdvertisingAge.com and can be found here.

Published: June 14, 2013