WALL STREET ON MARINEAU

Byline: Thomas Cunningham

NEW YORK — With its decision to bring in former Pepsi Cola executive Philip A. Marineau as its president and chief executive, Levi Strauss & Co. has picked up a sophisticated marketer with the talents to revive the flagging denim brand.
That was the opinion of Wall Street analysts who generally lamented that his departure would be a loss to PepsiCo, where he headed the North American beverage operations.
During his 20-month tenure at Pepsi, Marineau oversaw the introduction of the new low-calorie Pepsi One beverage, the “Star Wars”-related marketing effort and the introduction of the “joy of cola” campaign to replace the “generation next” tag line.
A major marketing push to make the Levi’s brand popular with younger buyers is the key to the company’s renaissance, according to Larry Leeds, analyst at Buckingham Research.
“American Eagle Outfitters, Abercrombie & Fitch and Tommy Hilfiger have taken a big slice of the jeans business [from Levi’s]. If he’s a good marketer and he can make the brand more attractive to Generation Y, then he’s going to be a great success,” he said.
Marineau’s expertise should transfer well from Pepsi to Levi’s because success at both companies depends on developing new products and marketing them effectively, said Roy D. Burry, analyst at Brown Bros. Harriman.
But Marvin Roffman of Roffman Miller Associates, a Philadelphia-based money management company, said recapturing Levi’s lost market share will be a major project for the new ceo.
“Levi’s has seen an enormous erosion of market share, so he’s got a challenge in front of him,” he said.
William P. Pecoriello, analyst at Sanford Bernstein, said it was Marineau’s strong marketing skills that helped stem Pepsi’s market share decline against Coca-Cola. The North American beverage division is a major part of PepsiCo, contributing about 30 percent of its profits, he said.
“He was a strong asset for PepsiCo,” Pecoriello said.
Marineau was under no pressure to leave Pepsi, as his was one of the best-performing divisions at the company, according to Brown Bros. Harriman’s Burry.
Analysts speculated that the reason he left was because he had a longstanding desire to be the ceo of a major company.
“Leaving Pepsi to be the top executive at Levi Strauss is an offer he couldn’t refuse,” said Roffman. “There’s no question that both companies have extraordinarily strong brands, but Roger Enrico [PepsiCo chairman and ceo] is not going anyplace, and from the standpoint of a personal challenge, Levi’s is a great opportunity.”
Burry agreed that Marineau made the move because he felt he would not achieve the top position at PepsiCo in the near future.
After Marineau’s departure Tuesday, Pepsi named Steven S. Reinemund president and chief operating officer, solidifying his position as Enrico’s likely successor. Reinemund, formerly chairman and ceo of PepsiCo’s Frito-Lay division and a PepsiCo board member, was widely seen as Marineau’s major competitor for the ceo post.
One blemish on Marineau’s record occured while he was president of Quaker Oats Co. and the company bought Snapple. Snapple’s performance never approached the company’s expectations, and Marineau evenutally resigned from Quaker. However, Marineau should not be held responsible for the ill-fated deal, according to Pecoriello
“He was the fall guy for that,” he said.
And Marineau, who at one time was believed to be in line for the top spot at Quaker Oats, was also responsible for making that company’s Gatorade brand into a powerhouse, according to Pecoriello.

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