Art & Commerce

Got Cookies? The Keebler Foods Co. recently completed a successful IPO, selling nearly 12 million shares at $24 each. The public snapped them up and, in the first few days of trading, the stock gained 15 percent in price. Keebler-the No. 2 competitor behind Nabisco in the $8 billion cookie and cracker industry-views its stable of brands, including Hydrox, Cheez-It and Sunshine Krispy, as one of its two main strengths. The other? A 3,200-person field force that visits 30,000 key retail locations an average of 2.8 times a week. (There’s no evidence that management sends the elves out to check household pantries.) The company spent more than $9 million per week last year on “marketing programs,” a term that embraces advertising as well as consumer promotions. The strategy relies on classic marketing: leverage the Keebler name, one of the few packaged-food brands that generates more than $1 billion in annual sales. The company estimates that Keebler is recognized by approximately 98 percent of U.S. households and bought in approximately two-thirds. Currently, sales are concentrated in supermarkets; other channels, such as mass merchandisers and convenience stores, are targeted for more attention. -Alan Gottesman (westendal is principal of West End Consulting.

Keebler Foods, the cookie market’s underdog, hopes aggressive marketing will help it close in on Nabisco, the market leader.
Cookie category sales ……………… $4.8 bil.
Cracker category sales …………….. $3.3 bil.
% sold in supermarkets …………….. 78.0%
Keebler share of supermarket sales …. 24.2%
Nabisco share of supermarket sales …. 34.2%

Source: Keebler’s IPO prospectus. Figures are 1997 data.