When Edward Marra first grabbed the reins as president and CEO at Nestlé Canada in September 2001, it didn’t take long for him to start ripping down walls in an attempt to facilitate communication. Marra has been with Nestlé for 21 years, most recently as the head of marketing for Nestlé USA’s frozen entrées, and he adopted the open-concept plan from the Glendale, Calif.-based U.S. headquarters.

But in Toronto, not all staff members were initially comfortable with the new structure. Top executives were shuffled out of their private offices and into the communal open space, many begrudgingly. However, reports Marra, they now get the point. ‘We have floor meetings once a month to keep staff current in terms of information. A lot of meetings are also held on the shipping docks of the plants at 11 p.m. at night.’

At first, Marra’s factory visits distressed Nestlé employees. ‘When I first showed up at the plant, they all thought I was there to close it down,’ he quips. ‘We have an open Q&A session at the meetings – people ask good questions, and we get good ideas.’ It’s that constant flow of conversation that Marra believes will benefit Nestlé’s marketing strategies and help achieve his goals of doubling profitability in the next three years and assuming a leading position among food and beverage companies in Canada.

Nestlé may get some help through further acquisitions, as at press time it was a contender to take over Hershey Foods Co., the largest candy and chocolate manufacturer in the U.S., which was put up for sale in late July. Pfizer also recently placed its Adams confectionery business, including the brands Dentyne, Trident and Chiclets, up for grabs. Although Marra won’t speculate on how the various shakeouts would impact the industry, he chatted with Strategy about where he views opportunities for growth, and how product innovation is essential to both great creative and, ultimately, success.

Which of your brands have the greatest potential for growth?

Powerbar probably points to the future in that it offers energy and nutrition. The growth in this category is at 40% to 50%. We have TV advertising with Catriona Le May Doan, and most of it runs on sports channels. A lot of emphasis on this brand is put towards sponsorship of 10 km runs, triathlons, etc., because it’s all about reaching people who are very active.

We have new Powerbars that are dipped in yogurt and the taste is improving in the category overall. We’ll be addressing that [in marketing]. I think in the future there will be a broader group of consumers because we all need energy, due to the demands of work and life.

Nescafé is one of our largest brands in beverages; we have upwards of 60% of the instant coffee market. We also have more co-branding efforts and our Nescafé Frothy Turtles is one of the best sellers right now. The iced cappuccino market is really growing and being developed by the Tim Hortons of this world. We think it’s also a retail opportunity, so we’re testing Nescafé Ice Cappuccino in Calgary.

One of our long-term concerns for the brand was how to attract young people, so we now have a promotion with MuchMusic, which is almost like venture capital. They submit an idea, and the grand prize is $20,000. The first time people drink coffee is in college or university while cramming for exams so it’s good for us to get that exposure and become a brand they trust.

There has been a lot of activity in the packaged meals arena lately, too. What do you attribute that to?

Our frozen business has a growth rate in the high double digits. People want convenience, quality and health.

The innovation of our Stouffer’s Lean Cuisine Skillet Sensations, which launched last year, and Stouffer’s Oven Roast Sensations, which launched last spring, has really changed the category development. What’s interesting is that there’s a little bit of preparation from the consumer. When we asked if people cooked in research, they said yes. When we asked them how, a lot of it was doctoring.

We’re launching Stouffer’s HomeStyle Dinners right now and those are comfort foods. After Sept. 11, more people stayed home and wanted more substantial foods, so we have bigger portions.

These brands all get a lot of TV support.

You’ve done some interesting ads for confection and ice cream lately. What’s driving that?

We have five out of the top 10 bars, with Kit Kat being the leading candy bar. This is an area where we’re really putting a big effort on great new creative, and we’re seeing what happens when you take a brand like Kit Kat and innovate with a product like Chunky. It brings a whole new segment to the brand and we’re attracting a younger user – teens and young males.

Kit Kat Chunky currently is the number 11-selling bar in Canada, which is almost unheard of. For the last 20 years, the top bars have been the same.

Ice cream is another significant division for us. There are two parts. One is impulse, which are the brands [like Drumstick] you would find at variety stores, and then there’s the home [category], which would be our confection-branded ice creams, like Haagen-Dazs.

This year, Nestlé Sundae is a big winner in packaging and product innovation and we’re pleased with the results so far. We’re way ahead of where we want to be. [Toronto-based agency J. Walter Thompson handles many of Nestlé's brands including Kit Kat, Aero and Sundae. It was also recently awarded additional ice cream accounts, including Legend, Parlour, Drumstick and Haagen-Dazs.]

Why has Sundae been so successful?

The bigger the company, the simpler the strategy has to be. So on ice cream it’s three things – customer service, innovation and driving demand. The fact that it sounds so simple is the strength of that strategy. Beyond that, it’s about constantly measuring yourself. Is the strategy working? And can you prove that it is working?

In today’s world, the old adages of you can’t measure advertising or promotion, that’s bullshit. If you’re not seeing results, more than likely your strategy isn’t sound. Or your delivery of that strategy isn’t effective.

If you look at most of our advertising, it’s very product centred. In the [MacLaren McCann] Nescafé spot [where a woman tries to tell a guy he has foam on his lip by making gestures], in the work for Aero, which is all about bubbles melting, and even for Sundae [where a group of nuns happily indulge in the treat], the product is central to the whole commercial.

There are a lot of ads where you have interesting situations, but the product gets lost. Some brands forget that the job of advertising is to sell product. The issue there is that the product is lacking uniqueness, or a competitive advantage.

I think in this market, innovation is essential. Private label is so strong, and if you want your creative to be effective, you need something like Sundae, or a clearly superior-tasting product, for your marketing mix to work.

Why have you returned to TV advertising for Aero and Kit Kat?

I think it has been about eight or nine years for Aero. Kit Kat has had some advertising, but not a lot. In general, especially with our confection brands, we’ve under-advertised them. We are spending 25% more on advertising now, but we’re concentrating on core brands. If you did a little bit on all our brands, you wouldn’t have the impact.

The approach we’re taking is pretty standard. Start with the research, and get at the essence of the brand. If you look at Aero, it was about the melting bubble. So you crystallize that, then cheerlead the agency and demand great work.

Many people are focused on the negatives in the industry. The economy isn’t strong and that immediately fosters cutting advertising. We’re seeing that if you dial up the advertising, and if it’s good and effective, you can do something about sales. The opportunities that one sees in the marketplace with fresh eyes is very important, and leadership has to deliver that. You need to inspire an organization, and lead by example.

How are you leading by example?

A big emphasis is on communication. In my first six weeks I visited all our plants, sales offices and customers. Being more externally focused was job one, to find out what our customers wanted, and about the morale of our people. When I was the junior person, I always wanted to know what was going on. I wanted to feel a part of it. The worst thing that somebody could say is, ‘you can’t come to the meeting because you’re too junior.’ How are you supposed to learn and contribute? So we really involve people.

Everything is completely open concept. It’s all about the brands and the consumers. A lot of the conference rooms reflect the customers -we have a Wal-Mart room, a Loblaws room, etc. We have town hall meetings every month, and we do them here or at the plants. We keep the communication simple: how are sales, how are profits, what are our initiatives and what is competition doing.

We don’t make it complicated in terms of the language, and keep it consistent. We put the top-performing brands on chalkboards [at headquarters] and if we forget someone, we hear about it. I think people want to win. The results give you the satisfaction.

When the Nielsen ratings come in, I’m directly involved in that. Usually, when the Nielsen’s are bad, there are lots of meetings. When they’re good, everything’s great. We spend as much time on both, so we can figure out the critical variables. What’s working here that’s not working there? I see things in ice cream that are relevant to confectionery. Or Powerbar and Lean Cuisine have overlaps. I try to put the information together, or the people together.

One criticism we hear about packaged goods companies is how risk averse they are. How do you overcome that tendency?

We put stretch goals in front of our managers. That forces them to think differently. If you have very small goals then you can pretty much do what you did last year. Life goes on, a couple of trade deals and you could make your numbers. Stretch goals force you to do something different and take more risk.

I think the second thing is the organization needs to feel that we want people to take risks. We have to create the environment where people feel comfortable to make proposals that are risky, whether it’s risky advertising or a faster product innovation. If it doesn’t work, we should be fast to say, ‘That was a mistake, but it wasn’t terminal.’

With things like Sundaes or the Aero advertising, there are more and more ideas coming to my desk now. People are seeing the results, and it’s motivating.