NESTLE SHIFTING STOUFFER'S DIRECT SALES TO BROKERS

JAMES TENSER

SOLON, Ohio -- Nestle USA is shifting the direct-sales parts of its Stouffer's field organization to broker coverage, as part of a consolidation of sales functions between its business units, Nestle Frozen Food Co. and Nestle Refrigerated Food Co.

The plan is to convert Stouffer's' current half-broker, half-sales field organization into an all-brokered one by Dec. 31, said James L. Dintaman, president of Nestle Frozen, Refrigerated and Ice Cream Cos.

However, Nestle will retain control of most headquarters functions in the converted markets, relegating retail support work and calls on smaller accounts to the broker force.

The change affects nine major markets where Stouffer's and Lean Cuisine products have been sold direct: northern California, southern California, Chicago, Minnesota, Detroit, southern Ohio, Washington/Baltimore, New York/Philadelphia and New England. Market observers estimated that these regions account for 50% to 60% of Nestle's frozen entree business.

The structure of the new organization in the converted markets will be a hybrid, said Rosalyn O'Hearn, a Nestle spokeswoman.

"In the former direct markets, broker services will be used for retail support and Nestle reps will maintain headquarters responsibilities. They will work in tandem to deliver the best service for each account," she said.

Under the new structure, a single broker in each market will handle retail field work for Stouffer's and Lean Cuisine, as well as Nestle brands Contadina Pasta and Sauce, Nestle cookie dough, and Coffeemate liquid creamers.

Within Nestle Frozen, Refrigerated and Ice Cream Cos., the new sales organization will be headed by Nino Cristofoli, who has been named to the position of senior vice president of sales, and Bill Bigger, who will be vice president of field sales. Cristofoli will report directly to Dintaman, the company said.

The latest changes follow a previous broker consolidation that O'Hearn said took place about two years ago. Excluding the nine markets mentioned, in most cases Nestle already had a single broker covering frozen and refrigerated lines in each market.

"We picked up the retail end of Stouffer's and Lean Cuisine,' said a broker in a converted market who already handled the Nestle refrigerated business.

He said that in some markets Nestle is keeping all of the headquarters functions. In others, it is retaining just its major accounts. "It depends upon the customers in the market."

The Nestle ice cream business is not part of the current consolidation, said O'Hearn.

Several observers interviewed about the changes at Nestle expressed puzzlement about the decision to dismantle what was widely regarded as one of the more effective direct field forces in the frozen foods business.

"Stouffer's had a top-quality organization. We took on a lot of their people," said a broker who now handles the consolidated Nestle lines.

Nestle kept its own headquarters people, and retained a significant staff to handle space management, market analysis, and retail audits. Other Nestle field people accepted retirement packages or moved to other positions within the Nestle organization. "In many cases their jobs have moved to other Nestle sales organizations or to brokers," said O'Hearn.

Nestle maintains that the changes are driven by a desire to provide superior service. "The more important thing is what we accomplish for the customer. The goal is to more efficiently respond to customer needs," said O'Hearn.

But brokers tend to see the rationale in cost savings. "The major benefit to Stouffer's is a streamlining of costs," said one broker. "They can spend more efficiently for operational expenses."

"Moves like these tend to be cost-savings driven, rather than functional-excellence driven," observed one broker who said he represents a competitive frozen food line.

Brokers also said they were generally wary of brand marketers' recent experiments with hybrid field forces, which they warn are unproven and may result lack of continuity in field coverage.

"It is a new hybrid that more and more manufacturers are exploring, unfortunately for brokers," said one broker.

The hybrid structure, which is also being tried by such brand marketers as Scott Paper, makes brokers' lives "more complex, more demanding and more uncertain," he added.

"A number of hybrids are now being touted. It is a newly emerging phenomenon. The bottom line is that it is unproven yet. It has no proven track record," said the competitive broker.