How business, doctors and journalists prey on your food anxieties I

Rogers <strong>and</strong> Cronk dream of repeating
in ice cream what AnheuserBusch
did in beer (Foaaes, Julv 31) .
"Ice cream is fragmented to the nth
degree," says Cronk,"<strong>and</strong>thereisthe
opportunity ."
To grab the opportunirv . Drever's
has earmarked for 1995 about $50
million for trade discounts, <strong>and</strong> budgeted
another 550 million for consumer
promotions <strong>and</strong> a series of
humorous ads that are airing on re-
LEFT .
__ Dr,=r's Gr<strong>and</strong> Ice Cream's
: T . Gary Rogers
<strong>and</strong> William Cronk II :,
6ELCvV :
Making
ice cream
The boys have made
their boldest bet yet .
Drever's is competing against locally
entrenched Blue Bell . Starting from
nothing last rear, Dreper's has already
gained 10% of dtemarket in the greater
Houston area .
To gain a potental ally, Cronk <strong>and</strong>
Rogers brought in Nestle as a minoritv
partner last year, selling the Swiss
giant 3 million newlp issued Dreyer s
shares <strong>and</strong> %carrants for another 2
million shares ( exercisable at 32), raising
in all S106 million . Nestl@ has
clearlv been impressed with the way
Dre,ler's distribution h<strong>and</strong>led ?]estl'e's
Drumsticks, Bon Bons <strong>and</strong> other
novelty treats .
If the warrants are exercised,
Nestle will ow n 22% of the company,
to Rogers <strong>and</strong> Cronk's 20% . But
there w ill be no dilution from the
estra shares : The company has
bought back 5 million shares on the
open markcr .
So far as the common capitalization
is concerned, then, the deal is a
wash . But the company is, in effect,
replacing possibhy impatient public
shareholders with a more patient
corporate shareholder . That seems
to indicate Rogers <strong>and</strong> Cronk are
dead earnest about gaining a dominant
market share, even at the expense
of short-term earnings .
Cronk <strong>and</strong> Rogers deny that they
plan an e%emuai sale of the company
to Nestle . They scarcely need the
money : At a recent 361/a, their combined
holdings of 2 .6 million shares
have a market value of S94 million .
Scll the <strong>business</strong>? Cronk chuckles :
"This is not term life insurance . This
is fun!" The small companies that are
DreVer's intended k°ictims mav have
another word for it. ~
k
gional <strong>and</strong> national television .
To put that spending in perspective,
consider this : The entire 54 .6
billion (retail sales) ice cream <strong>business</strong>
spent just 525 million on ad~ertising
in 1993, the most recent year for
which figures are available . _
No gain, no pain : All this spending
to drive competitors to the wall is
hammering Dreyer's margins . Two
vears ago the company earned nearlt'
$17 million, $1 .15 a share, a 3 .6% net
margin . Last year net plunged to just
7 cents a share .
Rogers <strong>and</strong> Cronk look on the lost
profits as an investment . The heavv
advertising, they claim, is alreadv delivering
for them in Texas, where
Dreyer's,
Breyers
<strong>and</strong> numbers
E .vtuY [N February, Rick
Cronk <strong>and</strong> Gary Rogers
chartered three DC 10s
to fly 1,250 Drever's Gr<strong>and</strong>
Ice Cream emplo` ees to
Oakl<strong>and</strong> for a partv at the
citv''s com•ention center .
They were celebrating passing
archrival Brecers Ice
Cream in market share .
Bre%ers was founded in
1866 by Philadelphia's
William Breyer <strong>and</strong> purchased
in 1993 by the
U .K.'s Unilever Ple,
which merged it with Unilever's
Good Humor ice
cream company . Based in
Green Bay, Wis ., Good
Humor-Breyers Ice Cream
also markets Popsic[c <strong>and</strong>
Klondike bars .
Drever's was started in
1928 in Oakl<strong>and</strong> bv a German
immigrant, William
Dreyer . Under a 1978
agreement between the
two companies, Dreher's
must differentiate itself
from Brcycrs cast of the
Rockies-which is %rhy
Dreyer's calls itself &i)'s in
those markets .
But was Dreycr's partv
premature? "Brevers is indisputably
the largeset "
br<strong>and</strong> in the packaged ice
cream <strong>business</strong>," claims
Richard New'man, marketing
vice president at
Good Humor-Bre~ers .
If Brepers is ahead, it
isn't by much . Citing Nielsen
market research,
Newman says Breyers' dollar
share of total packaged
ice cre am w'as 12 .6% for the
52 weeks ended Juh, 8,
compared with nearly I146
for Dreer's . He adds
that the $500 million (estimated
1994 sales)
Brevers' revenues were up
29 .7% for the first six
months of 1995, compared
with 25 .3% for Dreyer's .
Responds Drever's
Cronk : "Let them think
what thet' want to think ."
The seesaw battle is
good for the media <strong>business</strong>
. Both parties are fattening
their ad budgets .
Breyers' ne«' Viennetta
concoction, a sort of ice
cream <strong>and</strong> chocolate log,
<strong>and</strong> Romantica ice cream
cake are being hea%ily
promoted . "vVe are more
than prepared to fight fire
with tire," says I!'e«man .
-S .L. ~
20~#OS"r3300 r"3300
4, ~ t
Forba e rlugrust 14, 1995 i f ' ~
http://legacy.library.ucsf.edu/tid/agf97d00/pdf