Familiar, Trusted Brand Names Are Lure for Grand Met
Most people know the Jolly Green Giant for his booming ho-ho-ho, not to mention his corn and peas. But almost no one knows from beans the British company that wants to buy him.
And that, say marketing experts, is exactly why London-based Grand Metropolitan wants so badly to purchase Pillsbury, the company that sells the Jolly Green Giant brand. With the purchase of Pillsbury, it would automatically inherit a shelf full of trusted brand names. Whoever owns Pillsbury, after all, also gets Van de Kamp’s frozen foods, Haagen-Dazs ice cream and Burger King.
“The brand names are the whole ball of wax,” said John M. McMillin, an analyst with the New York brokerage firm Prudential-Bache Research. “And the value of those names will only continue to increase.”
Sure, Pillsbury’s financial picture has recently been shaky. But, analysts say, most of its brand names are still solid as rocks. These brands have been bolstered by such familiar faces as the Pillsbury Dough Boy with the ticklish tummy and its recently purchased Bumble Bee tuna bee who buzzes around in a baker’s cap. These advertising characters have helped to give the brands the one ingredient that analysts say is almost impossible to place a price tag on: consumer confidence.
“The value of any company stems from the depth of its brands,” said Clive Chajet, chairman and chief executive of Lippincott & Margulies, the New York corporate identity firm. “As far as the public is concerned, whoever owns the company behind the brands is, for the most part, irrelevant.”
Few people, for example, buy Tide detergent because it is made by Procter & Gamble. Rather, say marketing experts, they buy it because they have come to trust the name. Likewise, said Rance Crain, president and editor-in-chief of the Chicago-based trade publication Advertising Age, smokers don’t buy the world’s top-selling cigarette, Marlboro, because it is made by Philip Morris. “The Marlboro name alone,” Crain said, “is worth more than all the brick and mortar that Philip Morris has around the world.”
Just how much are some of Pillsbury’s top brand names worth? Well, McMillin, the analyst, estimates the value of Pillsbury’s refrigerated dough products label to be worth $1.2 billion; the Burger King fast-food division, $1.2 billion; Pillsbury boxed cake mixes and flour, $700 million; Green Giant vegetables brand, $650 million; Haagen-Dazs ice cream, $250 million; Van de Kamp’s frozen food business, $200 million, and the Bumble Bee brand, $200 million.
No matter what the value of each separate division, the $5.2-billion price is still a good deal for Grand Metropolitan, mainly because the company stands to benefit from acquiring yet more brand name products, McMillin said. As the world’s largest liquor company, Grand Metropolitan already makes such recognizable brands as Smirnoff vodka, J & B scotch and Bailey’s Irish Cream. Its U.S. subsidiaries include Allen Pet Foods, maker of ALPO products.
Price of Recognition
Every brand--and every food maker--is constantly battling for space on the supermarket shelf, McMillin pointed out. After all, if a product isn’t displayed on the shelf, it can’t be purchased. “Unless your new salad dressing has the name of Paul Newman on it, you just don’t get shelf space too easily.”
Indeed, shelf space can make or break a product, said Robert Berglass, who is president and chief executive of Dep Corp. And the best way to get shelf space is to have strong brand names, he said. Although many people probably have never heard of Dep, most are likely very familiar with some of the products that the Rancho Dominguez company manufacturers, including Lavoris mouthwash, Topal tooth polish and Porcelana fade cream.
Two years ago, Dep purchased Jeffrey Martin Inc., the company that formerly made these familiar products, and at the same time Dep inherited the company’s Doan’s pill division. Just one year later, Dep sold the Doan’s division--which it bought for about $14 million--for more than $35 million.
Although Dep made a ton of money by selling the familiar brand, “you can’t really put a price on name recognition,” said Berglass. “No one knows what a Grand Metropolitan is, but everyone knows what a Green Giant is. Once they put on Pillsbury’s pants, they have bought themselves instant credibility.”
