Trade Event Report
Sanford C. Bernstein & Co. Twentieth Annual Strategic Decisions Conference
By Al Berrios (contact Al Berrios)

As William Jefferson Clinton started addressing his last topic, I couldn't hold it in anymore and had to excuse myself to go to the men's room. I really didn't want to, since I didn't want to miss the networking opportunity that immediately follows keynote luncheon speeches. However, nature was being a real nag.

Standing in line in the men's room (yes, an actual line in the men's room), Steve Reinemund gets right behind me. Recognizing me from his table, he comments positively on Bill's speech and I concurred. We both stake a solid 2 minutes at the stalls and as we're washing our hands, he says to me, "Long time, huh?". I say, "Yup, that ice tea just went right through me." Not realizing that it was Lipton Ice Tea, a brand owned by PepsiCo, who Steve happens to be Chairman/CEO of, I wrap up by saying, "My bladder almost gave out on me." In response, Steve says something to the effect of, "You're too young to have bladder problems."

At the elevator, I asked for his card. When he gave it to me, I say, "Purchase, NY." He cordially invites me. I mention I've already been there and recommend putting the entrance closer to the parking area. Steve then says, "I'll remember to put the entrance closer to you next time you visit." And in under 4 minutes, I gave one of the most powerful men in the food and beverage industry the impression that I'm a whiney youngster that he might never consider hiring.

Don't get me wrong. Steve struck me as a very intelligent and jovial guy. He responds to serious inquiry about his business, which he knows back and forth, and keeps a solid management team and advisors around him. Until that encounter at the Sanford C. Bernstein & Co. Twentieth Annual Strategic Decisions Conference at the Waldorf in NYC, June 2-4, I had always envisioned Pepsi as an ideal client for my small consultancy. Today, though, I understand that it makes more sense for us to invest in advising their smaller competitors using knowledge gained directly from these sort of interactions. Thanks, Steve.

So, how did I end up sharing quips about our former president and bladders with PepsiCo's Chairman/CEO? I knew Bill was speaking at the luncheon, but it didn't really occur to me how popular his speech would be until I grabbed the first seat I could find - at a table reserved for Pepsi, right next to the stage of the Grand Ballroom - while every inch of free space around me was hurriedly being occupied by all other onlookers. So, to the table on my left, Bill sits, surrounded by what can only be described as groupies. To my right, Steve grabs his seat. Immediately behind me, Michael Eisner casually strolls by and grabs his seat.

With every turn of my head, Bernstein's conference surpassed my wildest expectations and made itself a must-attend for me in the future. A little about Bernstein: Unlike any other firm I've visited (including Merrill, Bear, UBS, and CSFB), the one thing Bernstein has going for it is the respect its associates all have for it, borne from a sense of community, a sense of common purpose. A good friend of mine who used to work there and has been working at another firm for over a year now, still speaks to me about Bernstein in the pronouns "we", "our", and "us". She misses Bernstein like a home, even though she makes better pay, has bigger career options, and commutes a shorter distance to her new company. This sense of pride and community facilitates some pretty powerful relationships, which in turn, create conferences so amazing, it's hard not to gush about them.

About the companies I covered:

American Express - doing good, going to get better as they're finally allowed to partner with third-parties to issue their plastic (similar to how you get your Visas and Mastercards). Best of all, Amex cardholders are famously considered upper-crust, giving the Amex brand a must-have appeal to millions of future merchants.

Costco Wholesale Corporation - still cheap, but due to higher membership cost, has above-average consumer, intellectually and economically. If you've never been to a Costco, then you're not really cool. They sell $200,000 diamond rings next to bulk toilet paper, and they're selling enough of these things to displace Wal-Mart's Sam's Club as the largest wholesaler. Next move, expansion into Australia and other countries.

PepsiCo, Inc. - They divested Tricon, a collection of restaurants selling Pepsi at their fountains, to focus on just food. But what I didn't know is that they sell more food than beverages, with their Frito-Lays division accounting for nearly 60% of their business. It's so big, they've repositioned from the "salty snacks" category to a "convenience foods" category in order to expand their horizons. Obesity may be a problem, but you can't ever just have one chip. And when you're done, you need to wash it down with something sweet. And that's why PepsiCo will always be a winner.

Viacom - Mel Karmazin finally quit; #3 exec Jon Dolgen followed; Sumner's happy. Tom Freston and media darling Les Moonves are now in the lead for Sumner's job. My call is Freston will win; he's smarter and defers diligently to Sumner. After all, what's 3 short years.

I asked Freston about MTV Networks' online media strategy (since he mentioned investments in that area), and all it is a increase in tech investment to improve the community and services. No more MTVi, (I suppose) as each brand will manage its own web initiatives, using a standard platform. Although profitable, the web business is to be treated as extensions of the main brand, not as an independent operating unit.

Viacom will get into video games. You already know Sumner practically owns Midway. It's just a matter of time before Viacom leverages that relationship, continuing it's strategic balance of content without distribution.

And for the record, for all the media's wasted ink about Sumner's constant optimism in public and criticism of his execs in private, puh-lease! Sumner's 83! He's a grandfatherly, cantankerous old coot who thinks he's done no wrong and loves telling a good yarn to anyone who'll listen. Being a powerful media billionaire, Sumner's having the time of his twi-life. That's what old people do. Let's get over it, please.

Sixty-four companies presented during an intense marathon that tested the stamina of even the most hardened analyst. (Some guy even feel asleep sitting front row during the Clinton keynote!) Oh, so what did our 42nd president say? The topic of his speech was "Building a Global Community" and through his mastery of American political history, outlined how what happened once, happens repeatedly throughout history, with slight variations.

"All politics are deals when you can't kill, jail, or occupy your adversary"

He expressed his approval of a security strategy against the destructive forces that want to take advantage of our prosperity; he implored better relationships with the rest of the world by providing global healthcare which ultimately turns enemies into friends; and he noted something very important: although he expressed clear political inclinations, his goal was to present the facts as he saw them so we can compare them with what we know. He left us with one task: to think for ourselves.

Overall, this event merits 5 pluses (+ + + + +).


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