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Kraft grows killer stable with Nabisco kid brands

The shakeout from yet another big business merger is poised to hit the kid advertising field following the June acquisition of Nabisco Holdings by Philip Morris, but buyers are predicting ripples rather than tidal waves....
August 1, 2000

The shakeout from yet another big business merger is poised to hit the kid advertising field following the June acquisition of Nabisco Holdings by Philip Morris, but buyers are predicting ripples rather than tidal waves.

Philip Morris plans to combine Nabisco with Morris-owned Kraft, creating the world’s second-largest food company (after Nestlé). Geoffrey Bible, chairman and CEO of Philip Morris, predicts that annual cost savings resulting from economies of scale in the combined company will reach about US$600 million by 2003.

The resulting company will control a powerhouse of kid-targeting brands, adding Nabisco stalwarts such as Oreo, Chips Ahoy!, Lifesavers and Planters nuts to a stable that already includes Post cereals, Kool-Aid, Oscar Mayer and Jell-O. Bible says that he intends to keep the Nabisco brands under the Nabisco umbrella, but some buyers say that it’s likely that media planning and buying for the new brands will be handled by the existing infrastructure at Kraft as part of the cost-saving measures.

Still, while the company may save money through more streamlined media buying, New York-based Initiative Media’s senior VP and group director of national broadcast Gary Carr doesn’t see the consolidation affecting kid media CPMs too much. ‘The thing that affects pricing is how much money people are spending,’ he says. ‘Each product has its own marketing environment, its own competitors and its own marketing costs. I don’t think it’s gong to be like, oh, we’ve bought Nabisco, now let’s stop advertising Oreos, or let’s stop advertising Macaroni & Cheese Dinner, for that matter.’

Carr does say, however, that he could see Kraft switching Nabisco’s media buying to Grey Global Group’s Mediacom-already a key player in kid media buying-which currently handles spot and kid buys for Kraft.

In fact, the ad buying consolidation could be much more dramatic, because at press time, Kraft was reportedly reviewing the strategy employed to spend its approximately US$800-million-a-year marketing budget, with an eye on reducing the number of agencies employed. At the moment, four of Kraft’s core agencies handle most of the buying (Ogilvy & Mather, Young & Rubicam, Leo Burnett and J. Walter Thompson), but as of early July, Kraft was talking to companies such as True North Media, New York and Omnicom Group’s media arm, OMD-Canada.

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