CLOSE-UP: LIVE ISSUE/NESTLE - Nestle may favour big networks over the small fry. Will the local shops make it through a consolidation at Nestle?

The sharks are circling around the coveted Nestle roster, waiting

for the waters to clear so they can see for certain what opportunities

have been created by last week's news of a $2 billion global

shake-up.



At first glance the implications of the review are unclear. Some of

advertising's biggest fish have lost out, while others have got fatter.

And some, in terms of working on coveted Nestle accounts, could be

mortally wounded.



However, it could be those lower down the food chain that are most at

risk. The word is that the days of the local shops on the Nestle agency

list could be numbered. If the worst happens, they could find themselves

in the midst of a feeding frenzy.



The massive overhaul of its network arrangements means that Nestle has

consolidated five major global categories into five of its roster

networks.



McCann-Erickson will be in charge of coffee, Publicis will look after

culinary products, Ogilvy & Mather has picked up the chilled dairy

business, Lowe Lintas has been given sugar confectionary, while J.

Walter Thompson will look after the chocolate and ice-cream brands.

Interestingly, Dentsu, the food giant's remaining roster network, is

conspicuous by its absence from the list of confirmed appointments.



Nestle is eager to point out that lead network status doesn't mean that

all tasks in that category will be awarded automatically to that agency,

but the absence of the Japanese suggests to observers that there will be

more prizes for the others to gobble up.



Pet food is the one category on which Nestle has yet to make a

decision.



All networks profess to having no clue as to who will snap it up. Nestle

bought the US pet food company Ralston-Purina at the start of the year

and any agency would surely welcome the global billings of more than

£100 million, which the division represents.



Nestle explains the changes by insisting that it looks at its agency

arrangements constantly. The company claims it has been running trials

on these current changes for the past two years and has decided that it

wants to make them official.



It also says that this will not mean a drop in advertising budgets -

just an increase in the quality of communications. However, the

consolidation, coupled with the switch to payment by results announced

during the summer, seems to point to a multinational looking for

efficiencies.



On the surface, Lowe, JWT and McCann seem likely to come through the

review about even.



The allocation of lead agency on chilled diary should, eventually, up

O&M's international workload, while Publicis appears to gain from the

award of lead agency status on culinary products.



However, as is so often the case with Nestle, it's not necessarily as

cut and dried as that.



The most potentially confusing aspect is the different status levels

that agencies have been awarded on the roster.



First of all, there are lead networks. Cue the Nestle spokesman: "The

lead agency will, of course, work closely with the marketers within our

various strategy business units and within our geographic zones to

define together and to help to realise a single business vision for the

brand or category."



All of this boils down to lead agencies being empowered by the concept

of global brand unity. They are in charge. Then we have the aligned

networks. They may not be the lead agency for the brands that they work

on, but insiders say they are unlikely to lose accounts as a result.



Hence, aligned status could prove an equally crucial prize in some

cases.



Publicis appears to be the biggest winner here, taking the aligned role

for ice-cream, Nescafe, Nesquik and, it is said, the chilled dairy

category as a whole. McCann's hold on Nesquik, therefore, appears under

serious threat, but it is compensated by becoming the aligned agency on

culinary, safeguarding Crosse & Blackwell. Quality Street in likely to

remain at Lowe after the agency received aligned status on

chocolate.



The problems come if you are an agency with neither lead nor aligned

status. Then the word round the campfire is that you're in trouble.



This is where local agencies will have to watch out. Sources say that if

you haven't been given the "lead" or "aligned" shield, then your

business is destined to be moved to the lead network.



All of this will take time and, as yet, specific brand movements between

roster agencies are not clear. Nestle has been likened to a

brontosaurus: the head makes a decision but it takes a long time for the

body to move.



It is generally considered that it will take a year for the true

ramifications to become obvious.



But nonetheless, the sharks can smell the blood. It is thought that

local agencies have not been given a status and their Nestle business is

therefore vulnerable in the eyes of the networks.



Nestle vehemently denies this will be the case. "We have brands that

exist only in a few markets, and such brands will remain outside the

scope of this new development," the spokesman insisted. The official

line is that the company will not be firing any agencies.



This will be some comfort to Roose & Partners, the agency which, some

predict, will lose its grip on Nestle next year to either JWT or

Lowe.



Right now it handles the Maverick, Toffee Crisp and Willy Wonka brands

in the UK, but you can bet your life that both networks have an eye on

the business.



Roose & Partners' managing partner, Angus Fear, isn't afraid. "They kept

us in touch with the implications of the review," he says. "We are

assured that the situation remains the same. We're confident with our

relationship with Nestle both in Croydon and in York. We are a local

agency, not a network. This affects the networks and not us."



And Fear knows his client well. Before his three-and-a-half years at

Roose, he spent six years looking after the business at JWT.



Nestle's system of "matrix management" would seem to back him up. This

basically consists of two overlapping power bases: SBUs (strategic

business units) and jurisdiction market heads.



Sources close to the review say the market heads asserted their rights

to stop certain brands moving, protecting some local agencies, even when

the review appears to have painted a large bullseye on their sections of

the business.



But it remains to be seen how long they can fend off the attentions of

the big fish.



HOW THE REALIGNMENT AFFECTS THE UK

CATEGORY/BRAND INCUMBENT LEAD ALIGNED AGENCY

CULINARY

Crosse & Blackwell McCann Publicis McCann

COFFEE

Nescafe McCann McCann Publicis

CHILLED DAIRY

Nesquik Chocolate Drink McCann Ogilvy &

Mather Publicis

CHOCOLATE AND ICE-CREAM

Aero, Milky Bar, Quality

Street Lowe Lintas J. Walter

Thompson Lowe/Publicis

After Eight, Rolo,

Kit Kat, Smarties,

Lion Bar JWT

Toffee Crisp, Willy Wonka Roose &

Partners

Rowntree Collection McCann, Roose

Nestle Ice-cream JWT

SUGAR CONFECTIONARY

Polo JWT Lowe Lintas J. Walter

Thompson

Fruit Pastilles, Squash Lowe Lintas

PET FOODS

Felix BMP DDB, To Be To Be

McCann Decided Decided

Friskies BMP DDB

Friskies Go Cat McCann

Friskies Vital Balance McCann