California-headquartered Masterfoods USA is pulling the promotional rug from beneath poor performing brands and reinvesting the promo funds in media advertising to reverse declining sales.
The confectionery and petfood giant's $300 million (€245.7m; £172m) rethink on its so-called 'hobby' brands is the brainchild of president Bob Gamgort and Paul Michaels, ceo of parent company Mars.
The duo are cutting trade support spending on the "dogs in [their] portfolio", including Aquadrops mints, Cookies & and Pop'ables candy.
The move will finance a 20% increase in advertising for other brands. According to TNS Media Intelligence figures, Masterfoods' adspend last year was $408m, compared with $332m in 2004. Despite which the business has seen sales fall by 4.7% to $1bn in the year ended March 19.
Claims Gamgort: "This is a big change for the company. 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."
But not all retailers are convinced of the wisdom of the proposition. Says one anonymous buyer: "You've got to spend money to make money," and warns that rivals Hershey and Nestlé could grab market share.
Data sourced from AdAge (USA); additional content by WARC staff
