The Cincinnati Enquirer from Cincinnati, Ohio • Page 43

the Cincinnati enquirer i Monday: Money Careers It's a great time to refinance your house. Or is it? Financial experts say such a decision involves more than just finding a low interest rate. Enterprise 3 Plugged In 4 Classified 5 Commercial real estate Section Business Editor: Mark Ivancic, 768-8477; Fax: 768-8330 Sunday January 25, 1998 NESS TIP SHEET World gds a teste Heinz makes doggone best, study says Heinz Pet Products in Newport has barking rights, er, bragging rights, compared to makers of other dry dog food. As part of an extensive look at pet foods, Consumer Reports went to the of CMcmiiiaiLi daily experts 16 dogs and 13 cats to analyze i whether they uked super- i premiums more than cheaper foods. Each animal was offered bowls of sever- WiafcWtWSI Telecom Act falls short of promise Result has been mergers rather than more competition BY MARK RIBBING The Baltimore Sun The Telecommunications Act of 1996 promised to bring telephone and cable-television consumers lower rates, expanded choices and new technology.

The key to it all would be competition. The legislation cleared the way for local-service phone companies, long-disr tance companies and cable-television providers to invade each other's markets and bid to offer one-stop communications shopping. The real winrier would be the American consumer. But, as the Telecommunications Act nears its second anniversary, many; industry experts say those expectations are not being fulfilled. To date, you cannot tell me how average consumers are better off as a result of the Telecommunications Act" said Mark Cooper, director of research for the Consumer Federation of America.

"We have a great deal of concentration and very little competition. There'6 the possibility we won't get the competition the act promised, and therefore we won't get the benefits the act promised." Mr. Cooper said full competition in the local-service phone market would save consumers about $10 billion, but such competition is a long way off. Since the Telecom Act was passed in February 1996, 50 million Americans have switched longdistance companies, but only 1 million have changed their local-service providers. Mergers cut competition Critics say competition is floundering on other fronts as well.

Telephone and cable companies have largely declined to enter each other's markets. Industry mergers seem to portend an era of fewer, not more, competitors. However, not all industry observers paint a dark picture of the act Philip Wohl, an equity analyst for Standard Poor's, said the legislation has fulfilled its framers' hopes "100 percent" "It's just taking a period of adjustment as companies figure out what's cost-efficient" Mr. Wohl said. He agreed that the legislation is resulting in more mergers, but he said the trend will bring down consumer costs as the surviving companies become larger and more competitive.

"Now that you see the com: (Please see TELECOM, Page E6) Flavor-making industry's local roots run deep BY MIKE BOYER The Cincinnati Enquirer Sure, you know that Cincinnati produces laundry detergent jet engines and machine tools. But did you also know it puts the fruit flavors in your drink, the tangy taste in your snacks and the zest in your gravy? Cincinnati has been home to a small but thriving flavor-making industry for more than a century. That presence recently has been reinvigorated by almost $50 million in planned or completed investments by two major companies in a multibillion-dollar global flavor market: Wild Flavors the American arm of the Heidelberg, Germany-based Wild Group, has moved into its new $30 million North American headquarters and manufacturing plant off Interstate 275 in Erlanger. Wild says the Erlanger operation, which replaces three smaller buildings in Woodlawn, is the most modern in the industry and the first to totally control the odors from its flavor-making. The operation, which employs 150, is Wild's beachhead in a push to triple its share of the North American flavors market The privately held company won't disclose its annual revenue, but its parent, Wild Group, has estimated revenue of more than $700 million.

Swiss-based Givaudan Roure Flavors which acquired the former Tastemakers flavor-making joint venture in April, plans to break ground around March 1 on an $18 million expansion of its Bond Hill headquarters and research center. The two companies' projects combined "certainly make Cincinnati a focal point (for the flavor industry)," said Dr. Hans-Peter Wild, president of the Wild Group, which was founded by his father, Rudolf, in 1931. Both companies' investments underscore two trends in the flavor industry: Flavor makers are consolidating in numbers but expanding their reach, partly reflecting the global expansion of their food and beverage customers. And naturally based flavors are grabbing a growing share of the food and beverage market from increasingly health-conscious consumers.

Their piece of the pie With its expansion, Givaudan Roure, the $1.5 billion flavors and fragrance business of Roche Holding AG in Switzerland, is establishing the headquarters of its Americas flavor business in Cincinnati. The expansion will add about 100 research and administrative jobs at Givaudan Roure's headquarters at the Institute for Advance Manufacturing Sciences (IAMS) park. The company's operation, which employs about 250 people, will be expanded by another 70,000 square Photos by The Cincinnati EnquirerRichard Tsong-Taatarii al dry foods over a three-week period. One of Heinz's biggest dog food brands, Kibbles 'n Bits ('n Bits 'n Bits) came out as the "clear winner" among five foods sampled, the sur-; vey concluded. The dogs turned up their noses most of the time to rival brands Pro Plan Chicken and Rice, Eukanuba, Purina Dog Chow and Pedigree Mealtime.

Alas, another top Heinz brand for cats, 9-Lives, wasn't included among the feline fare. Finicky cats chose such brands as Friskies Ocean Fish, Purina Cat Chow and Whiskas Crave Original 65 percent of the time. Jeff Harrington McAIpin's a landlord? The McAIpin's store at Western Hills Plaza has six more years on its lease, Senior Vice President Randy Burnette said, and the retailer intends to honor it That might mean finding its own tenant Mercantile Stores Co. McAIpin's parent, last week con- firmed that it will be moving its west-side store less than a mile up the road to the former Lazarus building at Western Woods Mall. The transi- tion could occur as early as late June.

Sources at Mills which owns the McAIpin's building, said the lease expires in 2004. That's true, Mr. Burnette said, and Mercantile will pay the lease, though it could do so through a sublet. "There are a couple of prospects," he said last week, "but they're strictly preliminary prospects right now." Lisa Biank Fasig Millennium money If you had doubts whether the Year 2000 computer glitch was real, think again. The lawyers are getting involved.

Frost Jacobs LLP announced this week that it was setting up a group to specialize in the so-called Year 2000 computer problem. After all, why should those computer consultants get all the billable hours? The Frost Jacob's group basically consists of five lawyers who will continue doing their regular work. But lawyers have a way of generating work for other lawyers. In short those estimates on the cost of fixing the problem $300 billion to $600 billion might need to be revised. Guy Boulton Cone turns in key Stephen Cone, the marketer who helped jazz up KeyCorp's image, has left the Cleveland-based banking company to work for a mutual fund giant.

Mr. Cone, the high-profile marketing whiz at KeyCorp for the past three years, left the bank to become president of Fidelity Investments' new customer marketing and development group in Boston. Mr. Cone was known for developing offbeat campaigns, including hiring actor Anthony Edwards of ER fame as a KeyBank spokesman and installing a music-playing ATM in the Heather Schmiedicke, sensory manager at Wild Flavors, passes a strawberry-flavored sweet through a window into the tasting room, where even the lighting is controlled so it doesn't affect the mood of a taster. feei.

i I J7 At a glance Givaudan Koure Diuion purchase of Tastemakers, a joint venture of Hercules Inc. and Mallinckrodt almost doubled its flavor business, said Bob Pellegrino, senior vice president of its Americas flavor business. The combined companies, with sales approaching $800 million, have about the same share of the global flavor market as International Flavors Fragrances the industry leader that commands about 16 percent of the market Mr. Pellegrino said. The size of the global flavors market is hard to estimate because many flavor and fragrance companies combine revenue from the two specialties.

Mr. Pellegrino said Givaudan Roure estimates that flavors constitute a $4.5 billion market Givaudan Roure operated offices in Clifton, N.J., adjacent to its only U.S. manufacturing plant But after deciding last year to close that plant (Please see FLAVORS, Page E2) A look at Cincinnati's two largest flavor companies: Wild Flavors the North American business of the Wild Group, a Germany-based flavor maker with estimated revenues of more than $700 million. Area operations: Recently opened its $30 million research and manufacturing plant in Erlanger. Area employees: 150.

Givaudan Roure Flavors half the flavors and fragrance business of Roche Holding AG, the Swiss drug and chemical producer. Givaudan Roure's flavor revenues are about $800 million. Area operations: Expanding its Bond Hill headquarters and research facility, adding 100 jobs. The company has flavor plants in Carthage and near Florence. Area employees: 500.

Culinary technician John Scott measures out the ingredients for a Texas chili at Wild Flavors in Erlanger. Proffitt's eejoyieg sum of its parts -r ft XV 'J" 1 i f-'I -r. x. About Proffitt's Based: Birmingham, Ala. History: Founded by D.W.

Proffitt in Maryville, in 1919. Sold in 1984 to investment group led by R. Brad Martin, chairman and CEO. Stores: 230, primarily in South and Midwest. Employees: 41,000.

Sales: $3.5 billion (1997 estimate). Major acquisitions: 28-store McRae's, Jackson, 1 994. 53-store Younkers Des Moines, Iowa, 1 995. 38-store Parisian Birmingham, 1996. 40-store G.R.

Herberger's, St. Cloud, 1996. 52-store Carson Pirie Scott Milwaukee, pending. Rock and Roll Hall of 1-ame and Museum in Cleveland. Jeff McKinney Items for Tipsheet are gathered by Enquirer business reporters and compiled by Jeff Harrington of the business staff.

I If A He led a group that bought the four-store chain in 1984 and agreed to take over after Fred Proffitt retired as CEO in 1987. Mr. Martin took the company public the same year and during the next few years expanded by buying individual stores cast off by others. Then, in 1994, Proffitt's bought the 28-store McRae's chain. Mr.

Martin decided to make McRae's a Proffitt's division rather than convert the stores to the Proffitt's name. It became the model for future acquisitions Younkers in 1995; Parisian Inc. and G.R Herberger's in 1996; and now Carson Pirie. Although the divisions are similar, Parisian, with two stores in Cincinnati, has taken the place of the Proffitt's stores as the company's upscale unit its Bloomingdale's. "Proffitt's has done a superb job of merging small companies in this very competitive environment to form a much larger company that has a much greater ability to offer value to their customers and shareholders," said Walter Loeb, a consul- Rapid acquisitions have pushed revenues to annually BY DUNCAN MANSFIELD The Associated Press KNOXVILLE, Tenn.

Two years ago, Proffitt's Inc. Chairman and CEO R. Brad Martin predicted that the department-store chain would reach $1 billion in sales by the turn of the century. He's had to revise that prediction. When the acquisition of Carson Pirie Scott Co.

is completed this year, Proffitt's the owner of Parisian department stores will have 230 stores in 24 states with 41,000 employees and annual revenue of almost $3.5 billion. Mr. Martin says he's not done searching for expansion options. And he won't have to look hard, according to Ken Gassman, an analyst with Davenport Co. "There are so many regional department-store chains with 15 to 50 stores that would fit Proffitt's acquisition model that in our opinion, they can contin- The Associated Press R.

Brad Martin, right, chairman and CEO of Proffitt's with the company founder's son, Harwell Proffitt, outside headquarters in Knoxville, Tenn. Mortgage rates on the move The mortgage rate survey that used to appear in the Sunday Real Estate section is getting a makeover and moving to the Monday Business section. The survey will provide listings of the best rates offered by the area's largest mortgage lenders in an easier-to-compare format. It joins the savings rate survey that regularly appears Mondays. divisions each year, Mr.

Martin said. It also will continue to find savings through collective operations. And it will look for more acquisitions. i "We have developed the reputation of being the sort of folks that you want to put your business with if you prize your customer and your associates and if you have great real estate," Mr. Martin said.

"We believe there are some other opportunities like tiiat and we will focus on those in the years ahead," he said. tant and publisher of the Loeb Retail Report. But Proffitt's hasn't so much absorbed other companies as assimilated them into a larger organization while allowing them to keep their own identities, Mr. Gassman said. In the Proffitt's model, each new division keeps its own headquarters overseeing store management and division hiring.

But there are central management and operations centers. Proffitt's will continue to open five to seven new stores within its strategy. Proffitt's stock has tripled in value since January 1994, jumping from $9.94 to about $30, adjusting for a 2-for-l split in October. Mr. Martin, 46, a former state legislator and real estate developer, became interested in the company when his wife, Jean, came home raving about the stores after a shopping trip to Knoxville.

ue to grow near the same rate for several more years," he said. Mr. Martin hesitates when asked how large he wants the company to become: "Big is not necessarily what our ambition is. We want to create shareholder value and opportunity for our associates. Our mission is growth, and if that equates to size over time, so be it." Wall Street has embraced the mm.