NEW YORK In the past two years, Kraft Foods' global advertising spend grew 18 percent, from $1.31 billion in 2005 to $1.55 billion last year. At the same time, the company added new blood to its stable of creative agencies and pulled a large chunk of business out of longtime roster shop JWT.
New players have emerged in Kraft's ranks as well, including CMO Mary Beth West, who assumed that role in October. In short, it has been a period of tremendous change and more is on the horizon, as Kraft faces mounting pressure from Wall Street, commodity price increases and cost-conscious consumers.
Five roster shops are pitching U.S. creative duties on Philadelphia Cream Cheese, which spent more than $25 million in major measured media last year, per Nielsen Monitor-Plus. A Kraft representative identified the contenders as Havas' Euro RSCG, Interpublic Group's DraftFCB, independents Nitro and mcgarrybowen, and the incumbent, WPP Group's JWT. A decision is expected by the end of summer.
"Kraft's growth strategy calls for innovation across the board," the rep said. "We're looking for breakthrough ideas that motivate customers and help drive sales."
The creative jump ball comes only a few months after Kraft shifted its natural cheese creative account from DraftFCB in Chicago to mcgarrybowen in New York. Natural cheese spending was under $1 million last year, per Nielsen.
Based on recent meetings between Kraft marketing executives and roster agencies, sources expect more brands to shift and Kraft to possibly trim its roster. "There will be some kind of activity, some kind of realignment," said one source. Said another: "This is about them getting down to a smaller number of agencies." A Kraft rep denied any such plans.
Kraft CEO Irene Rosenfeld in February gave the company's five distinct units -- snacks, beverages, cheese, grocery and convenience meals -- greater autonomy in the form of full profit and loss accountability, so any changes to the roster are expected to be piecemeal.
That said, West, who formerly ran the company's beverage unit, is likely to play a significant role in any agency moves, as is Carole Irgang, svp of integrated marketing communications, said sources.
In the past few months, West has met with several roster shops, and Irgang and other marketing execs had informal sitdowns with Kraft agencies last week at Cannes. In a twist, WPP's Young & Rubicam, a onetime player whose share of Kraft has dwindled to a few brands in Italy, is making a bid to reenter the fold, with help from sister units, like Wunderman, that have strong ties to Kraft, sources said. Y&R, which declined comment, is said to have met with West.
Other Kraft roster shops include WPP's Ogilvy & Mather, Omnicom Group's DDB and Publicis Groupe's The Kaplan Thaler Group. Kaplan Thaler and Nitro both came aboard within the past year, picking up Bagel-fuls and Kraft Singles, respectively. Euro RSCG increased its share of business in November via Kraft's $7.6 billion acquisition of Danone's biscuit division, a client. The shop also works on Ritz crackers.
More long-standing are Kraft's relationships with Ogilvy, which handles brands such as Crystal Light, Maxwell House and Oscar Mayer, and DraftFCB, whose business includes DiGiorno, Planters and Lunchables. Mcgarrybowen joined the roster in 2006, when it landed Kraft salad dressings, mayonnaise and barbecue sauce.
JWT is seen as the most vulnerable roster shop, having lost eight U.S. assignments last year that collectively spent about $220 million in major measured media, per Nielsen. The loss devastated JWT Chicago, triggering layoffs and the exits of president Ros King and ecd Graham Woodall. JWT, which still handles seven Kraft brands in the U.S. and overseas, "is really feeling the heat right now," said a source. "They're under a lot of pressure."
JWT is not alone. "Everybody is vulnerable on Kraft. It's just the nature of how [the company] operates," the source said. The agencies either declined comment or did not return calls.