Magazine article Marketing

News Analysis: No Break for Nestle Chief

Magazine article Marketing

News Analysis: No Break for Nestle Chief

Article excerpt

Moving Nestle's ad business to JWT is part of MD Chris White's ongoing plan to boost its fortunes.

It has been just over a year since the arrival of Chris White, Nestle Rowntree's outspoken managing director, with his mission to turnaround a business he famously described as being 'in crisis'. White, who was flown in from the food giant's Australian ice-cream business, has generated headlines ever since. Last week, he was making them again when he moved millions of pounds of ad business from beleaguered Lowe into rival roster agency JWT.

Even before the jetlag had worn off, the straight-talking White announced his plan to turn Nestle Rowntree into a European flagship and a role model for Nestle firms globally within the next two years (Marketing, 19 February 2004). A year on, changes are evident. However, with just 12 more months left for him to achieve his ambitions, White's measures should already be having an effect on Nestle Rowntree's sales.

The primary focus of White's first year has been to sort out the flagship Kit Kat brand, seen by the market as a bellwether of Nestle's overall performance. Kit Kat's sales had been down by around 9% for 2003. According to AC Nielsen's most recent year-on-year figures to the end of October 2004, there has been an 11.9% uplift in value sales for Kit Kat, the fifth biggest chocolate confectionery brand in the UK, from pounds 83m to pounds 92.8m (does not include two-finger bar sales).

In the past year, Nestle has launched no fewer then 24 product variants.

Kit Kat has seen nine variants, including low carbohydrate, Christmas Pudding and a Kit Kat Editions range. Analysts are already questioning the long-term sustainability of continual variant launches. Ian Bell, senior research analyst at Euromonitor, says: 'It has worked so far, but there's only so much you can do with brand extensions.'

New ad strategy

Another of White's first actions was to scrap Nestle's brand-led strategy in favour of product and tactical focused ads. As well as dropping the iconic 'Have a break' line for Kit Kat, again attracting headlines, the new ad strategy has seen cutbacks of Nestle's spend across the board.

According to Nielsen Media Research figures comparing 2003 and 2004 spend, Kit Kat is down from around pounds 8m to pounds 6m; Milky Bar has had all above-the-line support pulled; support for main brand Double Cream has dropped from pounds 2.8m to pounds 500,000, although two variants have been backed by around pounds 900,000.

There are just a few exceptions such as Aero, which has seen an increase from pounds 277,000 to pounds 1.1m.

Nestle UK marketing chief Neil Ducray says reducing television budgets does not mean the company is taking its eye off marketing. 'I'm cynical about TV ads as they're working less well. We've done an analysis of the marketing options and this has seen a massive increase in other areas such as promotional support and sampling.'

Some analysts are warming to the new ad strategy. In December, Morgan Stanley downgraded Cadbury Schweppes in a report that stated 'momentum in UK chocolate shifts in Nestle's favour'. It did say Cadbury was still the best-positioned brand, but singled out the revitalisation of Kit Kat for giving Nestle a favourable medium-term performance outlook. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.