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