PILLSBURY CONSOLIDATING ITS NETWORK OF BROKERS

JAMES TENSER

MINNEAPOLIS -- In a move company officials say will improve service to retailers, Pillsbury here has begun a process that will reduce its broker force from 129 to 48, or one per market.

The company, which five months ago acquired Pet Inc., expects to complete the consolidation by next March, with its remaining brokers under one-year renewable contracts. "This is about going to market with one voice," said Ken Sobaski, vice president of sales for Pillsbury.

"It's about exercising marketplace power," he continued. "We will be making one call on a customer representing all our businesses. Our funding approach, category management standards, all of that needs to be the same across all the company."

Pillsbury officials said the resulting broker coverage will need to be highly customized to individual market conditions, including the information technology and service requirements of key accounts. "One size does not fit all," said Scott Barth, vice president of sales for Pillsbury Specialty Brands (the former Pet Inc. businesses).

"It is incredibly externally driven, depending on the consumer franchise in each market, and on how sophisticated accounts are in each market," added Sobaski. "The customization comes in terms of technology, and in the kinds of tools needed."

Steve Aase, vice president of customer marketing at Pillsbury, said the one-year term is intended to reward and encourage brokers who "co-invest" with Pillsbury in the necessary information technology, systems, training and human resources required to properly service retail accounts.

"We want to create true long-term strategic alliances with our brokers," he said. With the addition of the Pet Inc. brands, Pillsbury's business currently is 55% brokered vs. 45% that is handled

by its direct-sales force.

"None of this is driven from a cost-of-sales standpoint," said Sobaski. "It is driven by doing what is right to meet customer needs in the marketplace. It is more about effectiveness in the marketplace."

The realignment began with broker evaluations. Top sales executives, including Sobaski, Aase and Barth, have been traveling the country conducting structured interviews with the company's current brokers. Both the Pillsbury and Pet Inc. broker advisory boards were consulted several times in designing the process.

"We have taken an incredibly objective approach to this," said Sobaski. "It means there are some markets where it is a very tough decision."

Aase and Barth said the process would be conducted in two phases, the first of which began June 5 and will continue through Sept. 30, covering 33 of the 48 markets.

"Of those, two were already single-broker markets -- Houston and Richmond," said Aase. Another 15 were "obvious appointments," either because one broker withdrew or owing to Pillsbury's experience. Another 16 markets are now in an interview process, including Phoenix, North Carolina and New York City.

The interviews will be completed by July 24, and all decisions for Phase One will be made by Aug. 1. Then a two-month training and transition period will follow, he said. Phase Two, involving the remaining markets, will conclude by March 1.

Aase said the phased approach was needed due to several limitations. "One is our organizational capacity to accomplish this smoothly. Another is our capacity to conduct training."

The company is not making any changes in its direct sales force, added Aase. Pillsbury's direct sales organization handles Pillsbury refrigerated dough products and its dry grocery products, including Green Giant canned vegetables, Hungry Jack, etc. Its broker organization handles all Pillsbury frozen products (pizza, Green Giant frozens), and former Pet Inc. brands: Downyflake, Pet Ritz pie shells, Old El Paso frozen, Progresso, Underwood Brands and B&M Beans.