The Chime Communications-owned agency last month won a multi-faceted corporate, financial and public affairs brief to handle the spin-off of Kraft’s global snacks business, since named Mondelez International.
It is thought Chime hoped to run the lucrative, Europe-based Mondelez account, which includes Cadbury’s, alongside Bell Pottinger Public Affairs’ UK work for Kellogg’s.
But the breakfast cereals giant sees the relationship as a direct conflict and is seeking a new lobbying agency, with Bell Pottinger declining to participate in the process.
Despite this, Bell Pottinger Group MD David Wilson insisted the split was amicable, and the agency would be handling an additional project for the firm in the near future.
Rachel Fellows, Kellogg’s UK corporate affairs director, added: ‘After a review of our internal structure, we’ve decided to take a fundamentally new approach to our external PA work and we will no longer be working with BPPA.’
She added that the move was ‘no reflection on the exceptionally high standard of work the team has delivered’.
Bell Pottinger has worked with Kellogg’s in the UK since 2006, helping to manage the firm’s reputation among political stakeholders and hostile NGOs in the face of an increasingly threatening political and regulatory landscape.
Earlier this year, Weber Shandwick was forced to resign Kellogg's US account after just one month over conflict concerns. Edelman subsequently created an agency called K Group Public Relations to enable it to circumnavigate conflicts and take the business.
The account switch from Kellogg’s to Mondelez comes at a time when the future of Bell Pottinger’s PR business continues to be up in the air.
Well-placed sources still expect Lord Bell and Piers Pottinger to lead a buyout of a chunk of Chime’s PR division in the coming weeks after news broke in January they were exploring the possibility.
Earlier this week it emerged WPP increased its Chime shareholding to more than 20 per cent, giving WPP a second seat on the Chime board. WPP CEO Sir Martin Sorrell has opposed the PR buyout plan, labelling it ‘a terrible precedent’.
WPP could theoretically block any move with a 25 per cent shareholding, but industry observers dismissed the idea that WPP was looking to obstruct Lord Bell’s plans. One analyst suggested WPP may be positioning itself for a future takeover of Chime if the spin-off came to fruition.
Richard Nunn, a media analyst at Charles Stanley Securities, told PRWeek: ‘Chime has become a global top five player in sports marketing, while WPP is nowhere in sport. If Chime does divest the bulk of its PR division, the remaining business starts to look quite attractive for WPP.’
WPP is long-time shareholder of Chime, with a shareholder typically between 15 and 20 per cent since 1997. WPP has been linked with a takeover of Chime before, notably in 2003 when a then-struggling Chime sold WPP 49 per cent of advertising firm HHCL. WPP subsequently bought the rest of HHCL in 2006.
Malcolm Morgan, an analyst at KBC Peel Hunt, suggested it was more likely WPP was protecting its shareholding from dilution in the likely event of Chime issuing more shares over the coming months.