Shadow of Mega-Mergers By Mega-Marketers Looms Over Madison Avenue

Kraftilever is a fanciful way to describe a combination of two global consumer packagedgoods giants Unilever No 4 and Kraft Heinz No 5 No one imagined such a megamashup could or would ever take place until last Friday when Kraft Heinz surprised the world with an unsolicited 143 billion bid for UnileverUnilever quickly and loudly rejected the offer and two days later Kraft Heinz withdrew it saying in effect quotNever mindquot for now anyway The investors who put together Kraft Foods and HJ Heinz in 2015 3G Capital and the gazillionaire Warren Buffett rarely take no for an answer so there39s a good chance they39ll be back perhaps with a sweeter richer dealYikes As if agency and media executives didn39t have enough to worry about these days A merged Kraftilever would have brought together or perhaps yet might bring together a seemingly endless array of pantry staples quotan empire of hundreds of household namesquot the New York Times calls it in fastmoving consumer goods segments such as dairy condiments sauces desserts frozen foods meats beverages spreads and soups Unilever also is a force in health and beauty aids haircare and skincare Kraftilever could39ve had shoppers covered from A A1 sauce to Z Zendium toothpasteA deal would39ve been one of the biggest corporate takeovers in history creating the world39s second biggest food giant behind only Nestle and concentrating an enormous amount of power over agency assignments as well as decisions about the media in which ads are to appearJust as money is the mother39s milk of politics it39s the lifeblood of Madison Avenue and media companies Unilever spends more than 8 billion a year on advertising while Kraft Heinz spends more than 1 billion their combined annual revenues would39ve been 82 billion Unilever has 13 brands with more than 1 billion in sales while Kraft Heinz has eight That39s a lot of cloutAnother worry 3G is notorious for slashing spending at the companies it acquires meaning that Unilever39s ad marketing and promotion budgets could39ve been at risk in the event of a merger Indeed Unilever executives were concerned about the costcutting at Kraft Heinz according to a Bloomberg report along with quotits lack of vision for cultivating brandsquotThat may be a reference to moves made by Kraft Heinz that are too conventional in the challenging competitive packaged goods marketplace which cries out for bold innovation For instance the most recent major product introduction under the Heinz label was a relaunch of Heinz mustard Yawn If Heinz is tops in ketchup some playitsafe strategist must39ve decided why not ask buyers to pick up the companion condimentToo often marketers like Kraft Heinz which get bigger through takeover after takeover quothave no idea how to keep growing organicallyquot the marketing consultant Hayes Roth of HA Roth Consulting wrote on Twitter That39s a deficiency in categories where consumers are clamoring for new kinds of products instead of the sameold sameoldAnother problem with Kraftilever would be as adman Mitchell Wexler wrote on Twitter quotsorting out all the agency conflicts that ever went throughquot Let39s say an agency working on campaigns for a Kraft Heinz brand also works on a brand sold by a Unilever competitor such as ColgatePalmolive Procter ampamp Gamble or Reckitt Benckiser Would that conflict be OK with executives at Kraftilever Or would the agency have to resign one of its brands to avoid getting firedIt39s also likely there39d be a ripple effect that would further roil media and agencies If Kraftilever came into being would other members of the Big Food brigade feel forced to make their own deals to keep up and remain competitive That could trigger mergers involving firms like Campbell Soup CocaCola Danone General Mills Kellogg Mars Mondelez PepsiCo or JM Smucker which could make life yet more difficult for Madison Avenue and media outlets And Kraft Heinz could of course go after one of those marketers if its executives determine Unilever is truly not that into themamp160amp160Ironically companies that were forerunners to Kraft Heinz were big believers in the power of advertising and media Kraft sponsored longrunning radio and TV shows such as quotKraft Music Hallquot to build up brands like Cheez Whiz Miracle Whip and Velveeta General Foods was known for commercials during series it sponsored that featured the shows39 cast members among them The Andy Griffith Show and The Danny Thomas Show HJ Heinz39s famous slogan quot57 varietiesquot was inspired by a sign for a New York City retailer39s quot21 stylesquot of shoes and its green pickle logo was festooned on pins that became prized giveaway items at events such as World39s FairsAmong the predecessors of Unilever was Lever Brothers the company cofounded by Lord Leverhulme famous as one of two marketers who39s credited as saying quotHalf the money I spend on advertising is wasted only I don39t know which halfquotIf you39re a marketer somewhere in the British Commonwealth you39re likely to hear the quote attributed to him in the United States it39s usually attributed to the retailer John WanamakerRegardless of Lord Leverhulme39s qualms Lever Brothers also was a prodigious ad spender in mainstream media peddling products such as Lifebuoy and Lux soaps Pepsodent toothpaste Rinso laundry soap and All and Wisk detergents Today Unilever39s ad dollars go toward brands as diverse as Axe Country Crock Degree Dollar Shave Club Dove Hellmann39s Knorr Maille Noxzema Pond39s QTips Seventh Generation St Ives Tresemme and VaselineNow it looks as if Unilever has escaped the clutches of Kraft Heinz to live and advertise another day But for how long Stay tunedClick the social buttons above or below to share this content with your friends and colleaguesThe opinions and points of view expressed in this article are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated bloggersamp160

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Shadow of Mega-Mergers By Mega-Marketers Looms Over Madison Avenue

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Stuart Elliott

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Shadow of Mega-Mergers By Mega-Marketers Looms Over Madison Avenue

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