Marketing Memo: Global Food & Grocery Company-Brand Marketer CEO's Speaking Out Much More During These Bad Economic Times; Have Your Noticed?

The big, global food, grocery and consumer packaged goods companies and brand marketers are fairing better than similar global companies in other business sectors in the current recession and financial-credit crisis. In part this is because people do have to eat. But it's also because such companies have tended to follow business fundamentals much better than say global financial service firms, the auto industry and a few other sectors. Such fundamentals include not building up too much debt and, most importantly, focusing on being consumer-centric marketers, something the U.S. auto industry has failed to do, for example, but something most big consumer food and grocery companies-brand marketers focus on closely and do well at.

And although people have to eat, they don't have to buy (and eat) your brands, even if you are Nestle, Kraft, or Campbell Soup. Of course having the huge brand portfolios these three global consumer packaged goods marketers do have -- in categories ranging from the most basic food and grocery items on up to niche natural, organic and specialty brands, as well as being the global market leaders in most of those food, grocery and beverage categories -- does help.

And in this serious global recession, which finds consumers trading down and looking for the best price they can find for food and grocery products, even these big food marketers are having to adapt -- searching for ways to lower their cost of goods, reducing expenses, and spending more money on things like price promotion.

We've also noticed another way the CEO's of these big, global food and grocery companies have been dealing with the global recession of late is that they are speaking out much more in to the media (especially the financial press) about what they and the companies they lead are doing to maintain and increase sales and profits in these difficult economic times. We been noticing a significant increase in interviews and the like from food and grocery company CEO's in the last couple months. And not just before earnings report time.

And it's no secret that the big consumer packaged goods marketers are communicating more so because the companies they lead are publicly traded ones. In this economic climate (check the stock market this week), communicating what a company is doing to the stock analysts who follow the companies and the investors, both institutional and individual, who invest in them is paramount -- particularly in relation to what initiatives these CEO's and their teams are taking to keep the company growing during the recession, along with the cost-cutting measures that are being made. Wall Street loves cost-cutting almost as much as it does sales and profit growth.

Communicating more frequently in these bad economic times also is important for these global food and grocery companies in terms of speaking to the food and grocery retailing trade. Grocers and other format retailers are increasing their store brand portfolios -- and devoting more shelf space, shelf space often previously devoted to manufacturers' brands -- as a way to offer lower prices overall in their stores to shoppers. And shoppers are buying more private label brands in-turn in order to save on their grocery bills. Every time a consumer buys a store brand that means a lost sale for a manufacturers' brand -- be it canned milk or pet food (Nestle), canned or packaged soup (Campbell Soup), or salad dressing and marshmallows (Kraft).

These big, global consumer packaged goods marketers therefore want the trade to know about the initiatives they are undertaking to create more value for their brands, even though the respective company sales forces or broker reps communicate such messages one-on-one to the retail buyers.

By speaking out more frequently -- as the CEO's of Nestle, Kraft and Campbell have been doing of late -- they can reach the top of the food retailing chain, CEO's, senior executives, ect. -- as well as consumers. It's part of a multi-communications paradigm. But those stock analysts and investors are at the top of the multi-audience pyramid.

Below are three features from today about each of these major global food and grocery companies -- Nestle, Kraft and Campbell Soup.

~Nestle. Forbes.com: Nestle Feels Confident About 2009.
~Campbell Soup. Rueters: Campbell ready to shop.
~Kraft. PBS-Nightly Biz Report: Kraft CEO talks recession strategies.

A few comments. First, notice that basically all three of these leading global consumer packaged goods companies are planning to grow despite (or perhaps because of) the recession. Second, notice the stress on value -- not just price but value. That's major adaptation from just over a year ago, when value wasn't a real hot button in consumer packaged goods marketing -- or for that matter with consumers. As that old saying goes: "What a difference a year makes." Particularly when the bottom falls out of the credit markets and major world economies.

Third, notice the focus on markets other than the U.S. It's a big world out there. Many people, such as the Chinese, have yet to become big buyers and consumers of Campbell's Chicken Noodle Soup or Kraft Salad Dressing. Imagine the sales growth if they do? Lastly, when reading the three pieces, think about the various audiences the food and grocery marketers are trying to reach -- and why. Doing so makes the reading much more interesting, particularly from a marketing perspective.

Supply-Side Memo: Giant Nestle is on the Prowl for Natural, Nutritional, Health and Wellness Food Companies to Acquire

The world's largest food company, Nestle, will soon have $11 billion dollars of cash on hand from its planned sale of 25% of its 77% stake in the U.S. eye care company Alcon, to drug company Novartis. Nestle announced the sale today.

Further, not too long after that, Novartis will acquire the remaining 52% of Nestle's original 77% stake (23% of Alcon isn't owned by Nestle in other words) for a fixed price of $28 billion, making the total purchase price of Nestle's (77%) stake in the U.S. eye care company by Novaris a whopping $39 billion.

Even more interesting to those in the natural products industry is the fact Nestle plans on using a big chuck of those new billions to acquire companies in the natural, healthy, nutritional and wellness food and product's sectors, we've learned.

This acquisition strategy fits well with the food giant's strategic positioning and strategy to become the dominant global corporate force in natural and nutritional foods. In fact, Nestle could use as much as half of the $39 billion, nearly $20 billion, to acquire natural, nutritional and healthy product food companies, we've learned.

In fact, one of our sources who is close to Nestle and thus needs to remain anonymous, told us on Monday Nestle executives have already identified a number of natural and nutritional foods companies which they plan on making acquisition offers to.

Switzerland-based Nestle has positioned itself into the world's foremost nutritional, health and wellness foods company, with top brands in these categories across the board. But it is far from finished. The world's "most admired" food company, as named by Fortune magazine, wants to dominate the nutritional and health and wellness categories globally because it's in these sectors where the company's leaders believe the most future growth will com.

Nestle makes and markets far more than just nutritional, health and wellness category food products of course. [Take a look at the company's brand portfolio here.] However, nutrition, health and wellness are the giant global food and beverage companies fastest-growing categories and where its going in terms of its overall global positioning, as we mentioned above.

Overall, Nestle controls food, grocery and beverage brands, and markets products in the following categories: bottled water (number one globally); baby foods; dairy products (including Hispanic and Asian specialty products); breakfast cereals (including partnering with General Mills outside of North America); and beverages (Nescafe coffee, Libby's fruit juices, Nestea and more, as well as a complete line of Hispanic coffee products).

Other categories include: ice cream (including marketing the frozen treat in China and the Middle East, among other places in the world), chocolate and confectionery (everything from basic chocolate bars to gourmet treats), prepared foods (everything from packaged soups and pasta sauces, to shelf-stable dinner entrees and frozen foods, including numerous specialty, ethnic, gourmet and natural/organic brands), and pet foods and pet care (the Carnation brand and Ralston-Purina brand, along with others.

Lastly, is the nutrition, health and wellness category, which Nestle is growing the fastest of all the above sectors in its consumer packaged goods and beverage group, and plans to use a major portion of the $39 billion from the sale of its 77% stake in Alcon eye care to Novartis to grow even faster by acquiring numerous companies in these categories, which are all related.

Nestle also has a huge global foodservice operation called Nestle Professional, as well as owning 30% of the cosmetics firm L' Oreal.

Look to Nestle for multiple acquisitions of natural, nutritional and health and wellness-oriented food companies in the U.S. as well as globally before 2008 is over.

Despite the global economic slowdown, Nestle believes there's no better time than the present to make major acquisitions to continue growing its nutritional sector. That's the primary reason, along with wanting to pay down some debt, the comapny is selling its 77% stake in eye care company Alcon.

Nestle's acquisition search is going to shake up the scene

There hasn't been much acquisition activity in the natural, health and nutritional foods manufacturing and marketing sector in the last year. With billions in its acquisition bank, Nestle is going to stir things up quite a bit and shake up the currently static M&A scene.

For example, there a number of successful, large and middle-sized natural and nutritional foods companies in the U.S. that are looking to be acquired or merged as they're in need of additional capital in order to get to the next level.

However, since there hasn't been a "big foods guy" like Kraft, General Mills, Heinz or Nestle (all which have made major acquisitions in the sector in the past) out there for a couple years, there's a pent-up demand so to speak in the natural, health and nutrition industry for suitors, in our analysis. Nestle could be that suitor many of these companies are looking for. Stay tuned.