Procter & Gamble
P&G's management team has sought ways to streamline its product offerings to focus on the ones where it competes extremely well, and has either de-emphasized or jettisoned the remainder. Most recently and most notably was the transaction in 2002 that sent Jif peanut butter to J.M. Smucker
For investors, this transaction will be fairly neutral. The amount that Childs is paying for Sunny Delight roughly matches the lost economic contribution for that brand to P&G. But P&G is able now to take resources that it would have reluctantly had to deploy on Sunny Delight and focus them on its core brands, such as Folgers and Pringles. Ideally one of the first things that the Childs folks will do is get a new advertising group to manage the Sunny Delight campaign. We're talking decades' worth of bad ads at this point.
Brand management is extremely tricky. Few companies are as good at it as P&G. Coca-Cola
Do you agree that the best thing to come from this deal will be no more Sunny Delight ads with those over-happy, hopped-up kids? Give your opinion on the Procter & Gamble discussion board (free trial required.)
Bill Mann owns shares of Procter & Gamble and Disney. Please check his profile for other holdings.