EXPENDITURE STRATEGY - KRAFT

1. Kraft, the food giant, is shedding its Post cereals biz in a complex $2.9 billion transaction with Ralcorp to focus on other promising, growing brands.
2. It has structured the deal in a way that minimizes taxes, making it the equivalent of a $4 billion cash deal.
3. In the all-stock deal, Kraft shareholders will get Ralcorp shares and end up owning 54% of the new company.
[1. Kraft had already exited brands like Milk-Bone, Cream of Wheat and Minute Rice in a bid for reliable growth.
2. It is delivering on the restructuring promised to shareholders earlier this year.]

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EXPENDITURE STRATEGY - UNILEVER

1. Unilever, the world's second-largest consumer-products company, is selling assets with revenue of about 2 billion euros ($2.93 billion) to focus on brands known worldwide.
2. It plans to cut as many as 20,000 jobs, or 11 percent of its workforce, to spur growth and improve profitability.

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REVENUE STRATEGY - MCCORMACK & CO

1. McCormick & Co., the world's biggest maker of spices, agreed to buy Unilever's Lawry's seasonings for $605 million, adding marinades and meat-tenderizer products.
a) The transaction is all-cash and includes the rights to the brands and related inventory.
b) It doesn't include a Missouri manufacturing plant or any workers.
c) It will add to profit immediately.
2. McCormick will use cash, committed bank lines and commercial paper borrowings to fund the purchase.
3. It agreed to pay Unilever a $30 million breakup fee if the transaction doesn't receive U.S. regulatory approval.
4. It raised prices and made purchases to meet a goal of increasing annual sales by as much as 6 percent.

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EXPENDITURE STRATEGY - EASTMAN KODAK

1. Eastman Kodak Co., the photography company reorganizing itself as more consumers opt for digital cameras, plans to sell its stake in China's biggest maker of photographic film, Lucky Film Co., ending a four-year partnership.
2. It is turning to digital products as demand for film wanes.
3. It has spent $3.22 billion since 2004 cutting jobs and closing factories as part of a four-year reorganization plan.

[Kodak failed to realize how quickly Chinese consumers would adopt digital cameras.
Many Chinese consumers leapfrogged film altogether and the first camera they ever bought was a digital one.]

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EXPENDITURE STRATEGY - JESSOPS

Photographic retailer Jessops had pre-tax losses of £25.2m for the six months to 1 April.

So it plans to save £15m by:
a) closing 81 and relocating 3 of its High Street stores and
b) cutting 550 jobs.

Some shutters down + some lay offs = some expenditure reprieve

[Click here for full story at: BBCNEWS.COM]

REVENUE STRATEGY - HENNES & MAURITZ

1. Hennes & Mauritz AB, Europe's second-largest clothing retailer, added shops and hired celebrity designers to compete with Inditex SA, which surpassed the Swedish company as Europe's biggest clothing seller two years ago.
2. Its M by Madonna range, such as silk dresses priced at $69.90, went on sale in March. Same-store revenue gained 17 percent in March, the fastest pace in at least 15 months, as the Madonna range hit store shelves. Sales growth fell to 8 percent in April.
3. It will collaborate with designer Roberto Cavalli.
4. It will continue to look for more collaborations to boost sales
5. It is adding its first stores in Asia. China will be an important market. It opened stores in Hong Kong and Shanghai. It is preparing to expand into Japan next year
6. It opened stores from Slovakia to Qatar during its second quarter. It added 83 outlets in its first half, and will open 95 shops during the rest of the fiscal year, mainly in the U.S, France, Spain, Germany, the U.K. and Italy.
7. It buys more than 60 percent of its clothes in Asia and sells them at about double the price.

More outlets + more celebrity designers = more revenue

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EXPENDITURE STRATEGY - CADBURY SCHWEPPES

1. Cadbury Schweppes Plc, the world's biggest candy company, plans to cut 7,500 jobs and sell the U.S. drinks unit that makes Dr Pepper and 7-Up to shore up profit and raise funds for expansion. The job cuts will help increase profit margins from about 10 percent to the “mid teens” by 2011.
2. It may auction the division, pushing the price above the rumored 8 billion pounds
3. Its sale of the drinks unit would result in a return of capital to shareholders.
4. It plans to close about 15 percent of its confectionery factories.
5. It sold its European soft-drinks division to buyout firms Blackstone and Lion Capital LLP last year for $2.2 billion.
6. It will split its Europe, Middle East and Africa unit and move out of its headquarters in London's Mayfair district to improve profitability.
7. It set aside money to pay an impairment charge following an accounting scandal at its Nigerian unit.
8. It will spend about £450m in a one-off charge for the reorganization. It will rename itself simply Cadbury after the sale of the drinks unit.

If you take care of the pennies the pounds will take care of themselves?

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REVENUE STRATEGY - CADBURY SCHWEPPES

1. Cadbury Schweppes Plc, the world's biggest candy company, has announced candy purchases in Turkey, Romania and Japan,
2. It plans “bolt-on” deals rather than larger acquisitions.
3. It boosted sales at the beverage unit rose 44 percent to 2.57 billion pounds in 2006, by acquisitions, as Cadbury spent $420 million to buy bottlers to help streamline U.S. distribution.
4. It has acquired Turkey's Intergum for $450 million and a 93 percent stake in Romanian candy maker Kandia-Excelent to expand in emerging markets. 5. It will buy Sansei Foods Ltd., a Japanese maker of sugar-free throat sweets.

More revenue is certain if you conquer more markets and more products

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REVENUE STRATEGY - ROYAL PHILIPS ELECTRONICS

1. Royal Philips Electronics NV, the world's largest maker of light bulbs, agreed to buy Color Kinetics Inc. for 592 million euros ($795 million) to extend its market lead in high-power light-emitting diodes, or LEDs. (Color Kinetics had sales of about $65 million last year).
2. It will pay $34 in cash for each Color Kinetics share, 14 percent more than yesterday's closing share price of $29.79. The purchase price is based on an enterprise value of 516 million euros and also includes about 76 million euros of cash on the balance sheet of Color Kinetics.

Revenue can come from finding the right business to buy out

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REVENUE STRATEGY - TESCO

1. Tesco Plc, Britain's biggest retailer, began lowering prices on more than 3,000 products from books to bicycles by as much as 34 percent starting this week, equating to 270 million pounds to stimulate growth.
2. It added about 2,000 premium products to encourage consumers to spend more, even as it reduces prices on other goods as interest rates rise.
3. It added organic cranberries and green beans, smoked herring with crushed peppercorns and “localchoice” milk bought from farmers near individual stores during the quarter as customers seek more information about the origins of their meals.
4. It is accelerating expansion outside groceries and offered 155.6 million pounds to buy Dobbies Garden Centres Plc on June 8.
5. It is adding stores outside the U.K. to gain scale and increase its bargaining position with suppliers. It operates in 13 countries from China to Poland and is scheduled to open its first U.S. stores this year. It will add 7 million square feet of store space outside the U.K. this year

Revenue is in mastering the price elasticity of demand

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REVENUE STRATEGY - HOUSEHOLD PRODUCTS

Fraudulent products hurt sales and reputations of companies such as Nestle SA, Procter & Gamble Co. and Unilever and may pose health risks.

The boom is being driven by:
1. The Internet, which makes it easier to find customers
2. The development of cheap, high-quality printing equipment that allows criminals to mass-produce packaging
3. Increasing trade with Asia, where trademark rules are less rigorously enforced.
4. A lack of consumer awareness, making copying household goods less risky than targeting luxury handbags and watches.

So:
1. Unilever's stops the goods before they enter Europe or North America, where it's trickier to track them down. It registers brands locally and depends on salespeople and distributors in Asia to gather evidence of fakes.
2. PepsiCo Inc. of Purchase, New York, works with national authorities to protect its brands.
3. Red Bull GmbH, maker of the world's most popular energy drink, has a global network of samplers who seek out rip-offs.

Counterfeits hit revenues directly first and then indirectly via reputation.
Counter-counterfeiting = revenue squared ?

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REVENUE STRATEGY - COLGATE-PALMOLIVE

1. Colgate-Palmolive Co., the world's biggest toothpaste maker, is collecting fake toothpaste from stores in four U.S. states and contacting all the company's accounts in the country to make sure they have no counterfeit products.
2. It will spare no effort to help consumers avoid counterfeits
3. It will pull fakes from store shelves
4. It is increasing the number of workers manning a consumer hotline and extending the hours during which calls can be made.

Fighting counterfeits brings revenue

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EXPENDITURE STRATEGY - CADBURY SCHWEPPES

1. Cadbury Schweppes Plc, the world's largest confectioner, will sell or spin off its U.S. drinks unit to focus on Dairy Milk chocolate and Trident gum.
2. It will split its Europe, Middle East and Africa unit and move its head office out of London to improve profitability.
3. It agreed to sell its Australian jams and jellies division to H.J. Heinz Co. as part of a plan to raise 250 million pounds from disposals of smaller assets.

Sticking to the knitting can terminate sub-optimal expenses

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REVENUE STRATEGY - INDITEX

1. Inditex SA, Europe's largest clothing retailer, expanded its Zara, Berksha and Massimo Dutti chains in Spain, France and China. It has more than tripled in size in six years to 3,200 stores, surpassing Gap Inc. and Hennes & Mauritz AB, and is opening at least one store each day. It is targeting 4,000 outlets by 2009.
2. It has spent about 4 billion euros over six years, and expects to add as many as 520 shops in the year to January.
3. It aims to boost sales at stores open a year or more by 4 percent to 5 percent over the medium term.
4. It can get new garments from the design board to store shelves within two weeks because it buys about half its apparel in Spain or nearby countries such as Morocco.
5. Its store managers use handheld computers to select the garments they want from collections, and cash registers relay information on sales to Inditex's headquarters.
6. It orders 50 percent to 60 percent of the apparel in each new collection before the clothes go on sale, compared with 80 percent to 100 percent for competitors, giving it more flexibility if consumers' tastes change.

Reputation can convert store additions into profitable revenue additions

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REVENUE STRATEGY - J&J

How is J&J enhancing revenue of its consumer health division?

Acquisition
1. J&J acquired Pfizer’s consumer health unit last year for $16.6 billion and their shared mission is: to keep their storied brands up to date by constantly tweaking the ingredients, redesigning the packaging, and finding whole new uses for the contents. (Pfizer had won the right to pitch Listerine as much more than a breath freshener simply by running some inexpensive clinical trials.)
2. It gained a foothold in the skin-care market by buying pimple-potion purveyor Clean & Clear and RoC, a French maker of anti-wrinkle creams, followed by soapmakers Neutrogena and Aveeno.
3. It preserves the independence of operations it acquires.

Focus on new products and new uses for old products
4. It put together small teams of up to a dozen scientists and charged each with tackling a cosmetic challenge, like an acne team, a pigmentation team etc, which gather input from marketing and development folks and partner with small, forward-thinking companies.
5. Its new system is helping aging brands such as Neutrogena expand in unexpected directions including an at-home version of something called microdermabrasian - a skin-smoothing procedure that can cost up to $200 at health spas.
6. It produced 400 new products last year, and the acquisition of Pfizer pushed it to the top of 22 consumer categories.
7. It keeps investing technology and innovation into baby potions to perpetuate revenues.
8. Its Pfizer scientists have mastered a formula for generating revenue from minor breakthroughs, which don’t cost a fortune, like the melt-in-your-mouth film for Listerine PockectPaks, which has become a new drug delivery platform that may be expanded to other over-the-counter drugs.
9. It is putting its new Helioplex, a broader and longer-lasting sunscreen, into several products, including Neutrogena's sunscreens and anti-aging lotions.
10. It drives demand for products by adding new claims about them – like Listerine can prevent gingivitis
11. Its unit managers are constantly weighed against internally designed “composites” made up of competitors in each of J&J's three major industries, consumer, pharmaceuticals, and medical devices. The goal is to outpace the composite on a top- and bottom-line basis.

Marketing experiments
12. It built buzz for Rembrandt toothpaste as the whitener of choice for the hip and youthful, by hosting makeover parties, book readings, and concerts. Just before Valentine's Day, its Rembrandt team placed an ad on YouTube that featured a young couple kissing passionately for 30 seconds. It was so racy that the video site relegated it to its adult section prompting viewers to click on the ad 180,000 times.
13. In 2006, it opened a satellite office in New York staffed by designers who spend their days devising fresh ways to serve up decades-old products, from how they're packaged to how they're displayed on store shelves.
14. It sponsors more than 700 baby centers in China to teach Chinese parents the art of therapeutic touch
15. It expanded a consumer research center in India in 2004, and has just broken ground on a similar center in Shanghai to garner insights on how to tailor products to local markets
16. It is using Pfizer to plug some holes in its geographic reach, for example, in Mexico

Acquisitions + new products + new uses of old products + marketing buzz + an eye on the competition = REVENUE.

[Click here for full story at: BUSINESSWEEK.COM]

EXPENDITURE STRATEGY - J&J

1. J&J’s merger with Pfizer will allow it to squeeze $500 million per year out of its cost structure and enable it to break even on the transaction in 2009--a year earlier than expected.
2. It is increasing its quarterly dividend, this time by 10.7%.

Cost savings are jewels under the feet of mergers and acquisitions

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REVENUE STRATEGY - TOM FORD

Designer Tom Ford aims to capitalize on rising global demand for luxury goods that has swelled the industry's annual revenue to about 160 billion euros ($214 billion), according to consulting firm Bain & Co.

1. Directly owned shops will open in London, Milan, Los Angeles and Hawaii starting next year.
2. Lane Crawford Joyce Group has agreed to open at least 87 franchised stores in Asia. The franchised stores will be located in places including Beijing, Moscow and Dubai.
3. He plans to start distributing his apparel through department stores such as luxury retailers Neiman Marcus Group Inc. in the U.S. and Harrods in London.
4. He has signed accords with Italian men's wear maker Ermenegildo Zegna SpA to produce clothing and with Estee Lauder Cos. for fragrances.

Reputation is the soul of revenue and more revenue

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REVENUE STRATEGY - PEPSI

Indian villagers charged that PepsiCo—which has named India as a top strategic priority—consumes excessive groundwater in their parched communities. Even worse was the repeated claim that the snack and beverage company, along with rival Coca-Cola Co., were allowing pesticide residue from groundwater to get into locally made soda. Blasted with e-mail alerts from Centre for Science and Environment, journalists and bloggers worldwide leapt on the story, raising the specter of a global consumer reaction just when soda makers were coming under harsh scrutiny for contributing to obesity.

What did Pepsi do?
1. It held a rare joint press conference with Coke in New Delhi, offering data that contradicted CSE's and saying the company followed the same strict standards all around the world.
2. Pepsi executives joined CSE’s Sunita Narain at sometimes contentious meetings over the next two years aimed at helping the Bureau of Indian Standards (BIS) arrive at guidelines on pesticides, caffeine, and even PH levels in soda.
3. It met with editorial boards, presented its own data in press conferences, and ran TV commercials featuring its then-president in India, Rajeev Bakshi, walking through a gleaming laboratory.
4. It also stepped up efforts to reduce water usage in its plants. A bottling facility, in the city of Panipat, near New Delhi, has reduced water usage to 8.6 liters for every case of two dozen 8-oz. bottles, down from 35 liters at the start of 2005. Workers post Japanese-inspired kaizens, or suggested improvements, to reduce waste, illustrating the ideas with cartoons and stick figures for added clarity.
5. After Indra Nooyi became Pepsi CEO she visited India, spoke widely of Pepsi's initiatives to improve water and the environment and her own fond memories of growing up in the country. One of her main themes: "This is a company with a soul." Indian newspapers and television covered her tour lavishly and with praise. Soda sales improved, although they ended 2006 flat compared with rapid double-digit growth in China.
6. It may even invest in educating communities in how to farm better, collect water, and then work with industry to retrofit plants and recycle.

Reputation is the soul of revenue.....

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REVENUE STRATEGY - GREENCORE GROUP

1. Greencore Group Plc, the world's biggest maker of prepared sandwiches, has withdrawn from the sugar industry in 2006 after 80 years as the European Union cut back subsidies.
2. It now gets four- fifths of operating profit from convenience foods after moving into the industry to tap demand from time-pressed shoppers.
3. It may build a 500 million-euro commercial and residential development on the site of its last sugar plant, in the southern Irish town of Mallow, which it shut in 2006. It wants to convert the property into 1,000 homes, offices, a hotel and golf course.
4. It also has applied to build a 1.1 billion-euro business and residential development on the site of another former sugar plant near the Irish town of Carlow. Developers are seeking land as property prices surge in Ireland, whose economy is the fastest-growing in the euro area.

Sometimes the greatest value of a sunset industry is in its real estate.

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EXPENDITURE STRATEGY - J&F PARTICIPACOES

J&F Participacoes SA, which controls JBS SA, Latin America's biggest meat producer, agreed to acquire Swift & Co. of the U.S. will reduce its debt obligations.

And it plans to cut costs at Swift without layoffs or production plant closures by:
1. cutting animals more efficiently
2. reducing transportation costs and
3. Reducing fixed costs will be a big obsession

This is a first on this journal: cutting costs without touching staff and factories!!

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