• Ad Age, Monday, April 10, 2006 12 PM

Masterfoods USA is making major changes in its product stable and its marketing spending. The first step is to eliminate several underperforming "hobby" brands such as Aquadrops mints and bite-size Pop'ables candy, among others. The next step is to shift an estimated $300 million in promotional spending to retailers into brand advertising. The moves are being orchestrated by Mars CEO Paul Michaels and Masterfoods USA President Bob Gamgort and are the result of heavy sales declines. Information Resources Inc. reported that the company's sales fell 4.7 percent to $1 billion in food, drug and mass outlets excluding Wal-Mart for the 52 weeks ended March 19. "This is a big change for the company," said Gamgort. "Paul and I really want to invest in long-term growth and get out of some of our 'hobbies' that are a drain on resources." He added that by cutting trade spending and the underperforming brands the company could afford a 20 percent increase in advertising for its brands as well as fund acquisitions. The first acquisition is expected to be announced in the next two weeks, he said.

Read the whole story at Ad Age »