Newman's Own: Preparing for life after Paul

By LENORA CHU
Filed Under: Small Business, Marketing
Fortune"

What happens when a company's eponymous founder and celebrity spokesman transitions out of the business?

Executives at food company Newman's Own may soon be addressing that issue, as 83-year-old founder Paul Newman reportedly struggles with cancer. The actor told friends as far back as 18 months ago that he was battling the disease, according to the Associated Press. Recently, Newman pulled out of directing a stage production of John Steinbeck's Of Mice and Men. (Newman's representatives have avoided directly commenting on the actor's alleged diagnosis, deflecting queries by emphasizing that he is doing well and is "not going anywhere.")

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Paul Newman's Own Products

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Newman and author A.E. Hotchner gave out wine bottles filled with salad dressing while Christmas caroling.

Newman's uncertain health and advanced age raise questions about the strategic direction of the food company Newman launched in 1982, with a salad dressing first mixed in the basement of the horse barn on his Connecticut property. Today, the company has a staff of 28 and an independent management team. It also launched a spin-off, Newman's Own Organics, run by the actor's daughter Nell Newman. But Paul Newman remains tightly entwined with the brand image of his namesake company - his face is the logo on all of its products - and executives are tight-lipped about future leadership plans.

"When a celebrity dies without a plan, the company and product can die with him," says Les Banwart, vice-chairman of the nonprofit organization Aileron, which consults on issues of professional management.

In the early days, Newman's Own traded heavily on the image of the actor known for classic films such as Butch Cassidy and the Sundance Kid and Cat on a Hot Tin Roof. Shoppers thronged around store displays that boasted the banner: "Butch Cassidy is also a gourmet cook." More than 10,000 bottles of Newman's now-iconic salad dressing were sold in its first two weeks on the market - and after the national and international press came calling, so did the supermarket chains.

Newman's Own says it turned a profit in its first year. All of the privately held company's profits and royalties go directly to Paul, who has from the start distributed the money he takes in from the company to charities. In 1988, Newman launched his flagship charity, Hole in the Wall Camps, which brings together children with serious and terminal illnesses for a free summer-camp experience. (Paul's daughter Clea sits on the Newman's Own Foundation board, which oversees the charitable grants.).Today, Newman's Own is close to hitting the $250 million mark in charitable giving, says company spokeswoman Susan LaMontagne.

Nell Newman acknowledges that her father's identity was critical to the success of Newman's Own and its associated brands.

"We definitely rode on his coattails," Nell Newman says of Newman's Own Organics, which she launched in 1993 under her father's tutelage. Independently owned since 2001, her company operates as a traditional for-profit entity, paying Paul a royalty for the use of his brand and image.

"That opened doors for us, but it wouldn't have flown if we hadn't maintained the high quality of the final product," she says.

At Newman's Own, Paul Newman is still involved in product development, according to senior vice president of marketing Mike Havard. Paul stopped by the company's Westport, Conn., headquarters in December for the final taste testing of the new line of cereals.

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    "Paul went through every one," Havard says. "He loves to write the legends on the back of the bottles."

    Whether a formal succession plan is in place is unclear. But most signs indicate that Newman has transitioned out of the day-to-day operations of the company.

    "He's a taster," says Nell Newman. "We don't put him in the middle of the process because it can be tedious."

    A board with a president and CEO oversees operations at the Association of Hole in the Wall Camps, although Paul Newman is known to spend many summer days visiting with the children who attend.

    "That's what he wants his legacy to be - the camps," Nell Newman says. "I mean, wouldn't you have more fun hanging out with the kids versus hanging out with a bunch of executives?"

    Succession experts point to the restaurant chain Wendy's (WEN) as an example of how celebrity brands can outlive their chief spokesman. Unlike Newman's organizations, Wendy's is publicly held, but founder Dave Thomas appeared in television commercials and was nearly synonymous with the brand.

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      After Thomas died of liver cancer in 2002, it became clear that the company had begun the process of succession long before the transition came to pass, says Matt Paese, vice president of succession management at consulting firm DDI. Wendy's board had in years prior already moved Thomas out of the operational leadership role and named a longtime veteran to the company's chairmanship. Wendy's survived Dave's passing with its sales intact: It reported revenue last year of $2.45 billion, up 19% from 2002.

      "That's the rule for healthy successions," Paese says. "Start now. Meaning you never stop planning - it's not a static event."

      Succession management consultant William Rothwell points to Gianni Versace's fashion house as another example of a successful handoff, one managed in particularly abrupt circumstances. After Gianni's murder in 1997, his sister Donatella stepped in as creative director and his older brother Santo became CEO. The company farmed out design responsibilities to another famous design house, and the brand survived.

      "You have to preserve that level of confidence in the name," Rothwell says.

      As for the future of Newman's Own, marketing VP Havard says the company has embarked on a "new strategic direction" and plans to expand into new food categories.

      "We want to get into younger consumers," Havard says. "Those Baby Boomers that love Newman's Own - we want their kids to love Newman's Own, too."

      Will Newman's stay in the family? Nell hopes Paul's two grade-school grandsons, Peter and Henry, will take an interest in the venture. Their mother, Lissy, designed the Newman's Own Organics label.

      "They love Pops," Nell says of the grandchildren. "But it's a tricky thing to make that work with family businesses. It's difficult to tell how the next generations will perceive it when they don't have any relationship to the person who was ahead."

      Meanwhile, Newman's book may help his story survive the ages. Publisher Nan Talese says Random House will soon be reissuing in paperback Shameless Exploitation in Pursuit of the Common Good, the book that Paul and Newman's Own co-founder A.E. Hotchner wrote about the company's start. (The title refers to the famously publicity-shy actor's take on the brand's marketing strategy.)

      "It's an absolutely wonderful blueprint for starting a company just using your common sense," Talese says. "Paul's legacy is a whole new image of philanthropy."

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      jayaustinmoore 06:26:02 AM Aug 18 2008

      Report This!

      DRILL HERE...DRILL NOW...SAVE MONEY

      trimmerbird 05:54:22 AM Aug 18 2008

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      what idiot is in charge of AOL. same stupid crap over and over.

      americanjetpres 05:48:46 AM Aug 18 2008

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      This is possibly one of the dumbest and substanceless articles I have ever read. You don't write off a living man firstly as it is classless but so is our media in this country. Secondly, his product will not only survive it will grow to large proportions whenever God calls the man home. Another wonderful example of our media and the lack of class this country represents in more ways than one. We should be ashamed at some of what is put out there for the world to see and "we" as a "country" are suppose to be leading the way?! Riiiight! Much sarcasm intended.

      mitchindy 05:04:05 AM Aug 18 2008

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      AOL: This is so old news! It's called "NEWs" - not "OLDs".

      patos7 02:32:48 AM Aug 18 2008

      Report This!

      WILL THE COMPANY TO ME///////////////////

      ciolajr 01:57:05 AM Aug 18 2008

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      Worthy causes such as hiring American workers to answer their telephones when we have a technical problem instead of sending all our jobs overseas. Now, wouldn't that be a great way to fulfill the phrase "Chairty beings at home!

      ciolajr 01:56:00 AM Aug 18 2008

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      HIs products are great by the way and I applaud him for his charitable work. This is an example of a guy who gives something back to society rather than being a selfish womanizer or building a 40,000 sqaure foot house or driving Rolls Royces and haveing a fleet of corporate jets.Interestingly enough, Paul Newman got thrown off the college football team for fighting and so he erolled in the little theater at his college. The rest, as they say, is history!Aol should take an example from him and donate a lot more than they have been. I'm sure Time Warner could spare a few million to some worthy causes.

      ciolajr 01:51:06 AM Aug 18 2008

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      Why take the chicken way out and rehash and old story? I'm sure Paul Newman and his daughters are smart enough to realize that the old man will die at some point and they have made provisions for that.This is sensationalism at its worse. Paul Newman is a great guy! I wonder how much AOL has donated to charity since its inseption? Does AOL give free internet access to the poor and underpriveledged kids or kids of foreign countries?I don't know, but I would be very curious. Stop running sensationallist doom and gloom stories.Every major company has a succession plan. Paul Newman and his family are not stupid enough to let their whole operation go down the drain just because the old man dies!

      warrenpeaceonu 10:44:35 PM Aug 17 2008

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      God AOL, don't you get tired of running the same story over and over and over week after week. If you need help finding more news, call me, I can help you. Since you aren't looking for new news, take the time to get this program up and running on a regular basis, that way we don't sit and spend out time writing up a post only to have it disappear or refuse to post, Thank you, and if non of this works for you, then stop taking my money and that way I won't be so upset that I'm being shafted each month,

      rmayala623 08:47:28 PM Aug 17 2008

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      Let me see...Sam Walton, Ray Kroc, Colonel Sanders, Orville Reddenbacher, Dave Thomas - All of these men have passed yet the legacy of their business remains. Newmans product have proved to be satisfyingly good products to me. Why are we predicting a demise when the others have carried on? If its good the people will buy!!!PS. Don't forget Aunt Jemima, Betty Crocker or Mrs. Butterworth!!!! LOLOL

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