PM History/2 - Legacy Tobacco Documents Library

PM history/42
what he calls "the Ready! Fire! Aim! approach" & thinks too much stuff
going into mkt these days is "goofy"//smaller distributors like Stokely
USA Inc . fighting David-Goliath fight vs . GF & Kraft for their line of
single-serve veggies or Ben & Jerry's Homemade, Ine ., premium ice-cream
of Burlington, fears Breyer & Kraft's Frusen Gladje
--CONTRASTS IN TOB . STRATEGY P VS . - NYT 10-27-88s The deliber
HMax vs . the zm a a.ent Ro s Johnson RJ s buyout bid seen by anas
bold effort to turn the enormous cash-generating capacity of the tob .
biz into VAST, QUICK PROFITS in $17 billion takeover bid, whereas PM's
$11 .5 million bid for Kraft is almost the EXACT OPPOSITE STRATEGY, major
expansion of co . into area prom~.sing a longer, brighter uure than tob .
seems to (even so, tob .-derived profits would drop to only 64% vs . current
76% if takeover succeeds) . . .note how since '80 cig unit sales down
from 619 billion to 558 but nrofit ner M units HAVE TRIPLED from $3 .80
to ~~_K5 . ."AN AMAZINGLY RESILIENT B NESS," sez Disna Temple at Solomon,
"H= many products can you b for $1 .20 that is an apeti1e-sun-.
pressant, a stimu ant or a re axan . d~ ependin(~~on the condit~ions -- &
is a egal product?" . . .HM thinks people are a wl ays going to have to eat
(vs . smoke) so food biz is promising . . .whereas $a sez he believes in the
future of tob, but he is more a dealmaker than a marketer, Wall St expects
him to sell off most o ood uni~-i e remains at RJR after a
successful buyout, this might mean more aggressive mktg of Winston &
Salem, slipping RJR brands -- but no matter how aggressive, Johnsonwatchers
doubt Ro s would sta the ame for ver lon
--HAMISH MAXWELL'S BIG HUNGER, B -- : also said to be
looking at Kraft but PM has lots more ready cash, HMax sez "We hope
they will see the benefit of making a deal w/somebody who will not break
the co . up" . . .PM's opening bid 22X K's est . '88 earnings, K price went
soaring 30pts in 2 days . . .HM wi lin to u for Kraft BECAUSE
PERFECTLY W/GF PR DUCT L v rv 1a.ttle o erlav an yst c Particelli
o Booz A1len calls K"one o£ the best b~s o£ the food co s ri--ht nnw .
They are growing like hell & very profi .table" . . .K 'is stron st of US
od co .s abroad which HM likes a lot, esp . Germany, taly & us ralia
w GF s s rong presence in Britain, Japan & Korea . . .MUCH SYNERGY POSSIBZ,E=
PM can gain by jointadvertisinz, event-snonsor5.n~_-distribu inG ~` mktg
punch to lock up huae chunk o+' moat coveted surPr shelf spye esp
w ere re r 3.gerated & freshly prepared foods are so1 . . .3n con~ast to K's
ine, manv. GF products are sl~ o~we~rg- r~owing powdered mixes, rozen veeeies,
cereT T& coffee . . .GF's firs it 6 g move : :.into re£rigerated came w/Oscar
Meyer purchase of '81//analysts say PM will overpay for K because decline
of cig biz is going to accelerate . . . under PM GF has mana ed to
shed much of its stifli ng bureaucracy but con inuing pro s .in domestic
co Eree Siz are a rea ag on pro i-Es . . .convinced that GF probs were_
} .u~zder~controlt PM beg~an scouting
hard for ano her~ foo biz a~~os
ago as seaxch team looked at broad array o cand dates, GF people were
partial to Kraft . . .HMax made his final decision on Friday 10/14 as
lawyers & execs worked .thru the weekend to Pet the deal ready for formal
offer, LETTER DELIVERED MONDAY to Richman w/cordial tone BUT LEFT NO
DOUBT AS TO PM' S INTENTIONS///SIDEBAR, "MARLBORO MAN, MEET THE MASTER
OF MAYO"e much about M1KE MILES, who at age 11, when other kids dream
of becoming a cop or an as r~ onaut, MM knew he wanted to be an adv-man . . .
jumped in '82 from Heublein after RJR bought it & Ky Fried to run fo~
4pera ions at 'Kraft_ he in_ ~Tman a,Tvo Fo>.-.-,,,~. .11 maQterv urna-otnd"
f the once- lodding food processor, JR focused on dumping weak units
& acquir ng promising ones w i e overhauled mktg, sales & production ;
it had been a sleepy, dumb old co . . . .in '8 Kr ft's first er sellin
the nonfood Dart bi (as in Dar & aft , net rose . on sales
jump of 2 ., w bet er igs for first 9 mos . of '88 . . .MM's mktt F wizardrv
draws raves from the industrv "He's crucial to the valte of' Kraft "
saus B W ldron, who had been his boss at Heublein, now CEO at
von . .
r .~yi 9 . iazzed ua K's ads ~~ pu_t new life int chees e & mavo,
formely sio- to no-growth produc~~ rpe ing Phila crem a cheese as
a lower-calorie alternative to butter & RECONSTITUTED ITS CREEKY CHEEZ
WHIZ as a microwavable hot cheese sauce, hiking sales 35%*********key I'O
~ .-~'- .;__-~ 's,,,,,s~k.ills + massive push of new products by Kraft ~35O ~
since ', now`testing whole line of Chillery brand entrees, sa7.a3s & `-I
desserts + Br ,e er•s reserves . . .MM : NW jour . major who started career -~
at Leo Burnett in ' 1, 10 yrs working on acets like P&G . grabbed chance
to oversee mktg at client K Fried where he became chairman in p
'77, ~
cleaning up a co . that had been a ered & beaten . . . or ah~ol , at
desk by 6am from his home in Lake Forest but makes it hom~y dinner
w/wife Pamela, an artist, & their two sons . . .e~a~ed accident in white
water ra£tine trin on Canada's Chilko River taking j v~i es of adv &
mktg execs . . .a director of the Ohi Lyric Opera co & Louisville Ballet/ .
a key part of HMaxwell's job nows to hold MM
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CN