Masterfoods cuts US brands and boosts advertising

NEW YORK – Mars subsidiary Masterfoods USA is expected to ditch lacklustre brands, acquire new ones and boost its adspend in an attempt to shore up flagging sales.

It intends to fund the rise in adspend partly by cutting back on the estimated £172m it spends on promotions with retailers.

First brands to be culled are AquaDrops mints, the Cookies& biscuit range and bite-size sweets Pop'ables. AquaDrops and Cookies& advertising are handled by Omnicom Group's TBWA\Chiat\Day, Playa del Rey, California; sister agency BBDO New York, holds the Pop'ables account.

Bob Gamgort, Masterfoods USA president, told Ad Age that the company could afford a 20% lift in advertising and could additionally fund acquisitions if it cut trade spending and what he called "the dogs in our portfolio".

He added that the move was a big change for the company and that its strategy was to invest in long-term growth while moving out of non-core areas of business, which were a drain on the firm's resources.

It is unclear whether Masterfoods plans to extend the strategy to outside of the US.

However, several UK have faced the axe in recent weeks. Masterfoods is to axe its bisc& range, launched just over two years ago, following disappointing sales and a £15m investment.

Two weeks ago, Marketing reported that Masterfoods was reviewing the future of its White Chocolate Maltesers range following disappointing sales.

Sources claimed that Masterfoods is considering a rethink on the brand, which was the company's first foray into the white-chocolate segment.

Jettisoning underperforming or also-ran brands and pumping more ad revenues into the remaining portfolio is a strategy followed by Anglo-Dutch FMCG giant Unilever, one of the world's top advertisers.

Former chairman Niall FitzGerald set the company on a five-year "Path to Growth" programme in 1999 designed to slash its brand tally from 1,600 to 400. At the same time, Unilever squeezed media efficiencies and, at first at least, ploughed more funds into advertising.

But current CEO Patrick Cescau has now admitted that strategy failed to deliver. He said the company's structure and its advertising and promotional efforts were to blame.

Masterfoods spent £234m on advertising last year, according to TNS Media Intelligence, up from £190m in 2004.

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