Coke appoints Tripodi Chief Marketing Officer

In hiring Joe Tripodi to lead its global marketing and commercial organization, Coca-Cola is counting on this seasoned veteran of consumer product marketing to pull it out of a new-millennial slump. Flush with success at Allstate Insurance Co., where he was responsible for all of its award-winning marketing efforts, Tripodi is seen as someone who can return the iconic brand to its former glory. Tripodi is perhaps best known for being the brains behind MasterCard's enormously successful "Priceless" campaign, back in the day. This year, he helped Allstate win a silver Effie Award in the "Corporate Reputation, Image & Identity" category for leading a public dialogue around a post-Katrina plan to better prepare and protect the nation from natural catastrophes. "Look at the job he's done at Allstate, with [actor] Dennis Haysbert as primary spokesperson," says Bob Liodice, president/CEO of the Association of National Advertisers, on whose board Tripodi served for most of Liodice's 13-year tenure. "Allstate must be heartbroken, and over at Coke, they must be dancing in the aisles." In Atlanta, Tripodi also will be responsible for coordinating and leading the company's strategic direction in commercial leadership. Coke CEO Muhtar Kent said, in announcing the appointment: "We believe that enhancing the focus of our global marketing team and processes on our customers [retail outlets]--who are the direct pipeline to consumers, all the way to point of purchase--will strengthen our entire business." Strengthening it needs. On Thursday, the consultancy Interbrand, which publishes with BusinessWeek an annual list of 100 global brands by value, had this to say about its No. 1 choice: "Even such perennial winners as Coca-Cola can have trouble boosting their brand. The beverage giant claimed the top spot for the seventh year in a row mostly because it is big and everywhere, but it failed to further grow its reputation because its move into healthier drinks has yet to resonate." Tripodi is Coke's first full-fledged CMO in quite some time. Mary Minnick served in the role in addition to other duties at Coke before quitting in January, when it became apparent she would be passed over for CEO. At the soft drink giant, Tripodi will have a much larger budget with which to play. According to Nielsen Monitor-Plus, in 2006 Coca-Cola spent nearly $500 million on marketing efforts versus Allstate's $336 million. Northbrook, Ill.-based Allstate, meanwhile, named Joan Walker interim CMO in addition to her duties as senior vice president/corporate relations. Prior to joining Allstate in 2005, Walker was the chief marketing and communications officer for Denver-based Qwest Communications International, a provider of voice and data solutions. Tripodi's Move Follows Trend Tripodi is following in the footsteps of other CMOs who leap tall industries in a single bound. Last year, Pizza Hut named Bob Kraut, General Motors Corp.'s director of brand marketing and advertising in North America, as its vice president/advertising and brand image. And Qwest Communications International named Thomas J. McLoughlin vice president/consumer marketing. He had been brand director at Miller Brewing Co. "People who can transition [from one industry to another] or who have successfully done so are very much in demand," Caren Fleit told Marketing Daily early this year. Fleit is senior client partner in the consumer and retail practice in the New York office of Korn/Ferry International, the executive search firm. "There's a lot of activity in the marketing area," Fleit said. But it's not a cakewalk: "The pressure is harder and [marketing execs] aren't lasting as long. They're on the hot seat as far as delivering results." The ANA's Liodice thinks Tripodi will do well at Coke. "He is one of the most intelligent people I've ever run across. He's incredibly insightful, a brilliant individual. He has such a great marketing sense and savvy. It is no surprise that one of the leading consumer products companies in the world would gobble him up. "He has a great sense of how to bring the fabulous Coca-Cola brand to the heights it once enjoyed." Still, there were cautionary notes. John Sicher, editor and publisher of Beverage Digest, said in reaction to the news: "People I talk to say good things about [Tripodi's] overall business skills. He now needs to learn a business, which looks much simpler from the outside to many people than it actually is." Tripodi also had been CMO for The Bank of New York and for Seagram Spirits & Wine. He had worked in various capacities for MasterCard International, where he created the "Priceless" campaign, and for Mobil Oil Corporation. "I've always greatly admired The Coca-Cola Company and its brands," Tripodi said in Coke's announcement on Friday. "Like many others, I have watched from the sidelines as they embarked on a transformational program to revitalize their business. "It's a great honor for me to partner with such a strong and creative management team and to help contribute to future growth through successful alignment of the Marketing and Commercial Leadership functions."

ConAgra Foods bought Alexia Foods, a privately held natural foods company, including the interest in Alexia held by private equity firm TSG Consumer Partners LLC. Financial terms of the deal weren't disclosed. ConAgra, the Omaha, Neb., packaged food company, said Alexia, which has $35 million in annual sales, will continue its operations in Long Island City, N.Y., and will remain under the leadership of president and chief executive Alex Dzieduszycki.

Pepsi and Nestle Talk Merger-Junk Food Spoils Megadeal

Health food -- of all things -- may have gotten in the way of a marriage of snack-food titans.

PepsiCo Inc., the maker of Doritos and Pepsi-Cola, explored a merger with Nestlé SA in late spring, which would have created an immense global food concern with increasing emphasis on "wellness" products. The effort was ultimately scuttled over a host of complications, according to people familiar with the matter.

PepsiCo made the initial approach, according to a person familiar with the situation. But Nestlé resisted the idea for fear that Pepsi's reliance on snacks such as potato chips and soft drinks would dilute its mission of building a business around more-healthful food and beverage products. There was also an array of issues in combining PepsiCo, with a $108 billion market capitalization, with the larger Nestlé, which carries a $150 billion market value and is based in Vevey, Switzerland.

There are currently no talks about a deal, these people said.

PepsiCo declined to comment. A Nestlé spokesman said the company "has not been pursuing anything outside of our stated strategic acquisition interests, which are in the area of nutrition."

A record spree of private-equity deals has been getting the attention of both investors and the media. But the pace of those deals is expected to slow down, as the market tries to digest some $200 billion of announced transactions. That hasn't stopped big strategic buyers from stepping to the fore. Loaded with excess cash and healthy stock prices, they are again considering the kinds of plucky combinations that came to define the last merger boom of 1996-2001.

Indeed, Pepsi's move raises the question of what's next for the Purchase, N.Y., food conglomerate. Chairman and Chief Executive Indra Nooyi has steadily won over Wall Street investors with rock-solid sales and earnings growth. The company's shares traded yesterday at $66.13, about in the middle of their 52-week trading range.

Without Nestlé or another big acquisition, the question for Pepsi is how it will deepen its health-and-wellness portfolio, an effort it is increasingly emphasizing.

After reformulating some of its foods with more-healthful oils in the U.S., it is doing the same overseas, where it is also reducing salt and adding oat and grain products. Yesterday, Pepsi, along with several other food companies, pledged to limit marketing to children.

The risk to Pepsi is these nods to wellness will hurt sales, pushing the company's shares down. Without more-healthful brands that Pepsi can pitch to everyone, its growth prospects could be limited.

Questions about Pepsi's next big move are also growing as rival Coca-Cola Co. has been on an innovation-and-acquisition spree of its own, expanding aggressively into a beverage area dominated by Pepsi: noncarbonated drinks. Coke last month snapped up Energy Brands Inc., maker of Glacéau Vitaminwater, for a hefty $4.1 billion and is considering more acquisitions, including possibly Snapple drinks, owned by Cadbury Schweppes PLC.

Ms. Nooyi helped to craft and implement Pepsi's current market strategy in the mid- and late-1990s. That strategy was to transform PepsiCo into a maker of a broad range of convenience foods and beverages, rather than focused so heavily on snacks and soda.

She appears to be continuing that strategy by looking to expand into or possibly acquire businesses that focus even more on healthful products and nutrition. As sellers of junk food continue to be targeted by public-health experts and activists -- and as consumers demand foods and drinks they believe will make them healthier -- Pepsi will be under pressure to keep expanding the parts of its business that look the least like junk food.

Ms. Nooyi is not shy about doing big deals. She was a driving force behind PepsiCo's purchases of Tropicana and Quaker Oats Co. In the past few years, Pepsi management has toyed with acquiring Group Danone SA, maker of Evian water and Dannon yogurt.

Nestlé's expertise in nutrition, including a research center and recently acquired clinical-nutrition and Jenny Craig diet-products businesses, would allow Pepsi to intensify its research and development into health-oriented and diet foods and drinks.

That said, Nestlé is still a huge purveyor of ice cream, candy bars and chocolate milk. The company has a joint venture with Coke to distribute some of its beverages.

A combination with Nestlé would also expand PepsiCo's international reach. PepsiCo wants to reduce its reliance on the U.S. market, where sales growth has slowed. PepsiCo's international division, including both its Frito-Lay snacks and Pepsi beverages, now delivers about 50% of the company's overall profit growth.

Since late last year, Nestlé has spent $10 billion to buy the clinical-nutrition business and the Gerber baby-food brand from Novartis AG. For last year, it posted about $82 billion in sales.

Internally, it has invested heavily in reformulating many products to be healthier, betting that consumers will pay more for foods that help them lose weight, age better or fend off disease. For example, it added vitamins to its milk products for children.

Since taking over as CEO in 1997, Peter Brabeck has revamped Nestlé's stable of brands, by selling off slow-growing items such as canned tomatoes and making a series of multibillion-dollar acquisitions in higher-growth areas. Since 2001, he has bought Ralston Purina pet food, Dreyer's ice cream and Hot Pockets sandwiches, among other brands.

Nestlé has ample firepower for a large acquisition. It owns 75% of eye-care company Alcon Inc., a holding that analysts regard as currency for a large acquisition, given that Nestlé could easily sell off the stake and raise as much as $33 billion. Nestlé is one of only a handful of companies in the world that maintain a triple-A credit rating, and it could raise its debt levels to finance a large acquisition.

In October, Nestlé's board is expected to choose a successor to Mr. Brabeck, 62 years old, who will remain as chairman. Periods of transition are often when big mergers occur. Last year, Nestlé hired Paul Polman, a Dutch-born veteran of Procter & Gamble Co., to be its chief financial officer. Mr. Polman has been charged with heading a major efficiency drive within the Swiss titan, a project Mr. Brabeck regards as one of his major legacies. Mr. Polman is regarded as a leading CEO candidate, although Nestlé's chief marketing officer, Lars Olofsson, as well as Paul Bulcke, head of Nestlé's Americas business, are also considered possible successors.

Energizer Acquires Playtex for $1.9 Billion

Energizer Holdings announced plans on Friday to acquire Playtex Products, putting the Energizer Bunny in charge of a host of new categories ranging from tampons to sunscreen and children's sippy cups.

 

The $1.9 billion deal happens in the shadow of the industry's 800-pound gorilla, Procter & Gamble Co., which is the primary competitor in both companies. Energizer already was up against P&G in two key categories -- batteries and shaving. With the acquisition of Playtex, Energizer will engage P&G more broadly, particularly in tampons and skin care, which make up a combined 72% share of Playtex's $641 million in sales.

But the deal still will bring Energizer's sales to only $3.9 billion, less than a 20th the size of $80 billion-plus behemoth P&G.

Even so, Energizer has fared well since P&G entered the battery and razor businesses with the 2005 acquisition of Gillette. Despite the global launch of Gillette's Fusion men's shaving system, Energizer has maintained its overall share in shaving. And it has gained share in recent years on P&G's Duracell batteries.

Energizer's stock price has more than doubled since P&G announced it would buy Gillette in early 2005, while P&G's stock is up about 15% over the period.

Hard times for Playtex
It's been a different story in recent years for Playtex, whose biggest brand, Playtex tampons, has been losing share to P&G's resurgent Tampax brand in recent years. Playtex also has been battling much bigger rivals such as Kimberly-Clark Corp. and Johnson & Johnson in categories such as baby care and sun care.

But Playtex's sales growth has improved since P&G veteran Neil DeFeo took over as CEO in October 2004.

In a rare occurrence, the stocks of both companies moved up on the news. In midday trading, Energizer shares were up 0.9% to $107.64, and Playtex shares were up 16% to $17.98.

"I think there are a lot of overlap and synergy opportunities," such as co-marketing of Energizer and Playtex products, Energizer CEO Ward Klein said in a conference call, but he didn't elaborate on how the deal would affect marketing for the companies.

Razor innovation draws to close
In a research note, Morgan Stanley analyst Bill Pecoriello said he sees the move as adding a "third leg" to Energizer as prospects for its other two businesses slow. "Our view is that the razor innovation cycle was nearing its end [following the Quattro and Intuition launches in recent years]," he wrote, adding that the battery business also faces issues with rising commodity costs and heightened competition from P&G.

He said Energizer has been cutting advertising and promotion spending to generate "earnings upside" the past several quarters.

WPP Group's Grey Global Group, New York, handles Playtex's tampon brand. WPP's Mediaedge:cia handles media for the Energizer brand, while sibling JWT handles Schick, and Omnicom Group's TBWA/Chiat/Day, Playa Del Rey, Calif., handles Energizer batteries.

Estee Lauder to Acquire Ojon

Estée Lauder will acquire Ojon Corporation, a privately-held hair care company based in Canada. The closing is expected later this month. A purchase price was not disclosed.

Ojon markets and sells products made with ingredients collected by the Tawira, an indigenous community living in the Central American rainforest. Ojon, incorporated in 2003, markets its naturally-derived shampoos, conditioners, styling products and treatments through QVC, specialty retailers and about 300 high-end salons. The Ojon products are also available in limited distribution outside North America.

Ojon products are made with palm nut oil produced by the Tawira and help improve hair's strength, moisture, shine and reduce breakage.In late 2006, Ojon also successfully launched Rare Harvest Tawaka Collection, a 3-SKU skin and hair care treatment line based on a wild-crafted blend of anti-oxidant rich cacao harvested in the Honduran rainforest.

"The acquisition of Ojon strengthens our position in hair care and further broadens our distribution. It should enable us to expand in the rapidly growing direct response television and specialty retailing channels," said Philip Shearer, group president of The Estée Lauder Companies. "Natural and organic products are among the fastest growing areas in the beauty industry and Ojon has a compelling story that we believe should resonate with consumers globally."

"Ojon is a terrific strategic fit in our portfolio," William P. Lauder, president and chief executive officer of The Estée Lauder Companies, said. "It's a socially responsible, innovative company with potential for rapid and sustained world-wide growth. We envision Ojon eventually becoming a global brand of wild-crafted, natural products made with ingredients found in indigenous communities around the world."

To source its ingredients, Ojon has partnered with the Mosquitia Pawisa Agency for the Development of the Honduras Mosquitia (MOPAWI Organization), a local non-profit group that works on behalf of indigenous communities in the region. Through its contract with the MOPAWI, Ojon purchases wild-crafted palm nut oil and other ingredients from thousands of Tawira producers, who collect the ingredients in a hand-crafted process consistent with ancestral practices. The ingredients, largely palm oil and cacao, are then sent to Originitalia, a plant in northern Italy, where they are purified and blended into Ojon products.

Danone to buy Dutch baby-food giant Numico

Groupe Danone, the world's largest yogurt company, said Monday that it planned to buy Numico, a Dutch baby-food maker, for €12.3 billion as part of its focus on healthy nutrition.

Danone, maker of the dairy-based Actimel immunity-lifting drink, offered €55 in cash for each Numico share, which is 44 percent higher than Numico's average closing share price over the past three months, the companies said. The deal would be worth almost $16.8 billion.

Danone and Numico had been at the center of speculation about a possible combination for years.

Danone's announcement last week to sell its biscuits division to Kraft Foods for €5.3 billion had renewed such talk and led investors to believe that the French company would use the proceeds of the sale to finally buy Numico.

Danone itself was last year seen by some investors as a takeover target, when its shares rose in July following reports that PepsiCo might make a bid.

Numico's shares had risen 11 percent to €44.50 early on Monday in Amsterdam before being suspended by the Dutch financial markets.

Some investors, including Michele Giovannetti, a fund manager at Montpensier Finance in Paris, told Bloomberg that the purchase was a good move for Danone but that the price was "quite high."

Franck Riboud, the Danone chairman and chief executive, said that "the price Groupe Danone was offering on Monday is a reflection of the outstanding quality and positioning of Numico as one of the world's leaders in healthy nutrition."

The takeover follows Nestlé's agreed purchase of a baby-food business from Novartis for $5.5 billion in April.

Food companies are expanding in the specialty nutrition market, where sales are growing faster than the rest of the food industry. Danone already owns the baby-food brand Bledina, which is part of its dairy unit, and ranks top of the health and wellness market, followed by Nestlé and Kraft, according to Euromonitor International.

Danone and Numico said the takeover "is not expected to have significant negative consequences on the employment situation of the combined business."

Numico will continue to be headquartered in Schiphol in the Netherlands, and Danone will run the business as a unit, keeping its current organization intact.

Danone, which also owns the Evian water and the Activia yogurt brands, has been attracting customers by selling products that it markets as healthy. Revenue in the first quarter rose 3.9 percent to €3.67 billion on demand for its products in Europe and the United States.

Under the leadership of Jan Bennink, Numico's chief executive, who joined from Danone in 2002, the Dutch baby-food maker started to focus on its core business in high-growth, high-margin markets, selling operations in Mexico, India and South Africa.

Competing with Danone and Nestlé, rivals with larger advertising budgets, Numico expanded in Italy and China, which promised faster growth.

It invested in innovation of new products and sold unprofitable vitamin units. Last year, Numico bought Dumex, which sells baby food in China and Vietnam.

Numico had sales of €2.62 billion last year, with about 72 percent coming from the baby-food business.

Numico's roots go back to 1896 when Martinus van der Hagen secured the exclusive rights to produce a baby milk formula from cow's milk.

The company also focused on developing special diet products like low-sugar milk for people suffering from diabetes. Today, Numico's products include milks, cereals, meals, drinks and desserts under the brands Cow & Gate, Olvarit and Bobovita.

Danone was set up in 1966 as Boussois-Souchon-Neuvesel, a maker of glass bottles for beverages. The company then expanded into foods and drinks and started not only selling the containers but also the contents. In 1973, Boussois merged with Gervais Danone to create the biggest food group in France.

The two companies said they expected the deal to be completed by October. Goldman Sachs and Citigroup advised Numico. Lazard and BNP Paribas worked with Danone.

Coke weighs bid for Snapple

An acquisition would bolster the beverage company's lineup of tea-based drinks.

 

Coca-Cola Co. is evaluating whether to make a bid for Snapple, the bottled tea maker that is owned by Cadbury Schweppes, as part of Coke's push into tea-based drinks, Coke Chief Executive E. Neville Isdell told Reuters.

"That is a valuation that we undertake, whether it is of interest to us or whether we can do it on our own," he said in an interview Wednesday.

London-based Cadbury, the world's largest confectionary company, is getting ready to separate its U.S. drinks division, probably through a sale. The division includes Snapple, Dr Pepper, 7UP and Hawaiian Punch.

Coke also aims to expand its palette of tea-based drinks using a revived pact with Nestle and recently met with officials from the Coke-Nestle joint venture, Beverage Partners Worldwide, to advance their plans, Isdell said.

"You're going to see more value-added products from the tea platform," he said.

New products with Nestle or a possible tea acquisition from Cadbury would serve Atlanta-based Coke by accelerating its efforts to expand its offering of healthful drinks, juices and waters.

Isdell rejected the notion that the market for carbonated soft drinks such as Coke was declining, and pointed to the quick rise in market share that followed the rollout of the group's new beverage, Coke Zero — billed as the company's most successful brand launch in 20 years.

When asked what Coke Zero would do to the group's published growth targets, Isdell said, "It will help it. I'm not going to give you a new prediction but it will help it."

Coke last said it expected long-term growth of 3% to 4% in volume and 6% to 8% in operating income.

Coke Zero has already grabbed market share of 3% to 5% for carbonated soft drinks in key markets such as France, Germany and Japan, Isdell said.

The Coke CEO has led a drive to expand the company's offering of noncarbonated drinks, which included a $4.1-billion takeover this year of Glaceau, the maker of Vitaminwater.

Snapple, which sells flavored tea, lemonade and juice drinks, is one of the world's largest bottled tea brands. Its offerings exceed those of Coke's entire tea portfolio, which includes Nestea, Gold Peak and recently acquired Fuze, according to recent Beverage Digest data.

Isdell was in Geneva for a United Nations meeting of business leaders, government ministers and others to review the U.N. Global Compact for corporate citizenship, in which Coke has played a leading part.

Isdell has led efforts to lower water consumption, recycle and reduce packaging, cut energy use and establish closer ties to communities in emerging markets, and has been an outspoken advocate of the U.N. compact.

The compact was created in 2000 as a counterweight to anti-globalization protests, such as those that disrupted the 1999 World Trade Organization meeting in Seattle.

Merck Hires Biogen Officer Peter Kellogg for Chief Financial Post

Biogen Idec Inc. Chief Financial Officer Peter Kellogg is leaving the biotech giant for the same position at Merck & Co.

Mr. Kellogg, 51 years old, will succeed Judy Lewent, effective Aug. 14. Ms. Lewent, 58, is retiring after 17 years as finance chief of the Whitehouse Station, N.J., pharmaceutical company.

Merck, known for promoting from within its ranks, said it conducted a comprehensive search outside the company before hiring Mr. Kellogg. "With his experience and his proven track record, Mr. Kellogg was the most qualified for the job," Merck spokeswoman Amy Rose said.

Mr. Kellogg, who also becomes an executive vice president, will oversee financial operations, investor relations, corporate development and licensing activities, and will manage business relationships with AstraZeneca PLC and DuPont Co.. He will report to Richard T. Clark, Merck's chairman, president and chief executive.

At Biogen, Mr. Kellogg was instrumental in the 2003 merger with rival Idec, and a year later became finance chief of the combined company. Biogen, based in Cambridge, Mass., said it will announce its plans for the finance chief's post in the next several weeks.

Mr. Kellogg will arrive at Merck at a time when its fortunes have greatly improved after several years of anemic earnings and the 2004 recall of its Vioxx arthritis drug.

Genzyme: Bioenvision buy to close July 2

 

Biotechnology company Enzyme Corp. said Wednesday a motion for a preliminary injunction to delay its proposed $345 million acquisition Bioenvision, Inc. was withdrawn from a Delaware court.

 

The preliminary injunction requested in a shareholder lawsuit was voluntarily withdrawn after both companies provided more information.

 

Drug developer Bioenvision agreed in May to be bought by Genzyme for $5.60 per share.

Genzyme said it anticipates closing the deal around July 2, when a tender offer related to the transaction expires.

 

"Many Bioenvision shareholders have already tendered their shares and we look forward to others doing so over the next several days," Mark Enyedy, president of Genzyme Oncology, said in a statement.

 

Bioenvision Inc. shareholder SCO Capital Partners LLC has continued to oppose the acquisition, accusing board members of a conflict of interest. SCO has also said Genzyme's bid undervalues the company.

 

Shares of Genzyme gained 45 cents to $65.17 in afternoon trading, while shares of Bioenvision shed 1 cent to $5.59.