Four months after London, England-based Unilever proposed a significant reduction in its global brand lineup, the first tremors have been felt in Canada and the speculation is that there are more aftershocks to come.

Earlier this month, Lipton, a division of Toronto-based Unilever Canada, fired longstanding agency partners MacLaren McCann and Saint-Jacques Vallée Young & Rubicam, and consolidated its business with existing roster shops Ogilvy & Mather, Ammirati Puris Lintas and J. Walter Thompson.

The move, which will see each agency responsible for a different business category, will allow Lipton to focus its strategic thinking and pave the way for the portfolio culling its parent company announced last September, when it said it planned to pare down its stable of 1,600 brands and concentrate spending on around 400 key labels.

‘This is something I see as an enabler to help us in that particular process,’ says Mike Welling, vice-president, brand development at Lipton, adding that ‘other factors’ also had a bearing on the decision.

It’s not yet clear which brands Lipton will phase out in Canada, but Welling maintains the process has been underway for some time.

‘There are many ways to cull or de-emphasize what you’re doing with various different brands,’ he says, ‘but this kind of stuff has been ongoing in Canada for a number of years, and I just see it continuing through this year.’

Welling’s remarks echo those of Lipton president Peter Elwood, who last fall stated that Unilever’s decision to cut brands would have little effect on the Canadian division, since they have already been focusing their attention and spending on strong brands over the past few years (see ‘Canadian brands expected to survive Unilever cuts,’ Strategy, Oct. 11, ’99).

Welling wouldn’t elaborate on the ‘other factors’ that prompted the agency consolidation, and refused to comment on whether Lipton felt it was receiving insufficient agency attention on all its brands. He did say, however, that ‘one of the key things is to make sure that there’s an appropriate balance in terms of critical mass between what size we represent inside an agency.’

While the reshuffling is being portrayed as a ‘made in Canada’ decision, Louis-Eric Vallée, president of Montreal-based Saint-Jacques Vallée Young & Rubicam, which worked with Lipton for 45 years, says his agency was dropped largely because it wasn’t part of Lipton’s global network of roster shops.

‘I think we were at a crossroads,’ says Vallée, whose agency handled Salada tea, Monarch margarine and Lipton SoupWorks. ‘Unilever had to rationalize its entire worldwide brand portfolio, and it (found that it) was increasingly difficult to have to deal with an agency that wasn’t part of its club agency network.’

MacLaren, meanwhile, a Lipton veteran of nearly 20 years, will lose the Becel margarine brand along with the Lipton Cup-a-Soup business. However, the agency continues to work with Good Humor-Breyers and Lever Pond’s, both of which are divisions of Unilever Canada.

The margarine brands will move to Ogilvy & Mather, which will head up spreads and cooking product brands, while the soup labels will go to Ammirati Puris Lintas, which will now handle culinary brands. J. Walter Thompson, which has been assigned tea-based beverage brands, will pick up Salada.

While the consolidation has affected only Lipton thus far, it could presage further reorganization in Unilever Canada’s other divisions, like Lever-Pond’s, says one agency principal who works with the packaged goods manufacturer.

‘The general theme is consolidation,’ says the source. ‘The reality is (Unilever is) looking to try and consolidate where they can.’

But according to Esther Lem, vice-president, brand development with Lever Pond’s, there are no plans to consolidate agencies at that division.

‘There’s nothing happening on our end,’ says Lem. ‘There’s lots of speculation, obviously because of what came out of Lipton, but no plans.’