GrandMet Tries to Regain Its Concentration

By Murphy, Chris | Marketing, July 11, 1996 | Go to article overview
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GrandMet Tries to Regain Its Concentration

Murphy, Chris, Marketing

GrandMet's appointment of a group-wide chief marks a new departure. Claire Murphy reports on the repercussions for brands

Last week's promotion by Grand Metropolitan of its top IDV marketer, Paul Curtis, to a group-wide marketing job, marks the beginning of a new era for the British food and drinks group.

The appointment to the new position of group marketing development director, was the first major move by new senior team chief executive John McGrath and chairman George Bull.

GrandMet is likely to be characterised in the future by a period of investment in its major brands, after many years of destabilising acquisitions and disposals.

Despite City disquiet in recent years over the performance of the company, there are signs that the results of concentration on its three key areas of food, food retailing and drinks are starting to come through. Half-year profits to May 1996 were up 46% in the foods business, although flat in drinks, which is too dependent on the US.

The establishment of a marketing supremo illustrates the policy of building its way to worldwide brands, rather than buying and selling, that McGrath wants to pursue.

So Burger King will stay, says a spokesman, because of its future as a worldwide brand. And the support being put behind the Pillsbury and Old El Paso brands in Europe illustrate GrandMet's belief in their potential for growth outside the US.

Curtis is known for championing brand development within IDV, with the growth of new brands including Malibu, Archer's and Bombay Sapphire credited to him. Brand extensions in the past year, like Smirnoff's Moscow Mule, have helped IDV retain its lead in an otherwise mature market.

His challenge will be to extend that organic brand-building experience to the rest of GrandMet's business, without treading on the toes of local marketers. Two priorities will be to reduce IDV's reliance on the US market, and to explore possibilities in food and drink in Eastern Europe and Asia.

The company has invested strongly in marketing - IDV spent [pounds]222m in the first half of this year, up 6% on the same period last year. This represents 18% of turnover.

"That is a large sum of money," admitted McGrath at GrandMet's half-year results announcement in May. "But I'm not worried about it. What we are selling to an extent is image, isn't it?"

GrandMet Foods, the subsidiary set up in the UK last year to house brands from Haagen-Dazs to Old El Paso under one roof, is set to receive 15% extra in the marketing coffers this year. Boosted ad budgets have allowed Haagen-Dazs to respond to new competition by going on TV for the first time, while even mature canned vegetable line Green Giant is benefiting from new packaging and ads.

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