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When one thinks of the largest
marketing spender in the U.S. food industry, Kraft easily comes to mind. But
when it comes to naming No. 2, the answer might come as a surprise: General
Mills.
The marketer of Cheerios, Pillsbury, Yoplait and Betty Crocker has become a
stalwart of the Great Recession, thanks to increased spending, but also product
innovation and its ability to capitalize on the trend toward in-home eating.
For the third fiscal quarter of 2010, General Mills saw sales rise 3% to $3.6
billion, and in the U.S. sales rose 4% in the first nine months of fiscal 2010
to $7.9 billion.
The marketer posted an impressive 33% jump in advertising and media spending.
Stifel Nicolaus analyst Chris Growe noted that "General Mills has quickly
reached a critical mass in its marketing spending that vaults it up to the
second-highest marketer within the food industry" behind only Kraft. And it
might even be closing in on the leader: According to an Ad Age estimate, General
Mills spent $1.2 billion on advertising alone during 2008, a 23% increase over
the year before, just below the $1.3 billion Kraft spent on advertising during
2008, a 16% decrease from 2007.
"We are first and fundamentally about brands," CMO Mark Addicks said in an
interview with Ad Age, "and I feel good about the brands and the growth ideas
about each [of them]."
The real challenge in this recession, Mr. Addicks said, has been to demonstrate
each brand's value and purpose as well as versatility. To wit: The company's new
chocolate Cheerios, for instance, are proving popular not only as breakfasts,
but as snacks and desserts.
These days, he said, consumers are asking, "What role do you play in my life,
and what value do you give me? I'm proud of our business teams and the ways
they're answering that question and playing more of a partnership role with our
consumers in their lives."
Here's a snapshot of activity with Mills' biggest brands:
Cereal
Big G Cereal division, which includes the various Cheerios flavors, Fiber One,
Cinnamon Toast Crunch and Lucky Charms, saw a 6% sales increase during the last
quarter. Honey Nut Cheerios takes the top slot at grocery, according to
SymphonyIRI, with sales up 2% in the last year to $339 million. (The data
doesn't include Walmart and club stores.) Hispanic families have been a
particular growth engine for Honey Nut Cheerios, Mr. Addicks said.
Yoplait
General Mills said the Yoplait division sales were up 4% for the first nine
months of fiscal 2010. It's still the top brand at grocery, with $387 million in
sales over the last year, according to IRI, but that's a 5% decrease from the
previous year. Yoplait's light version grew sales 1% to $377 million, as did
Yoplait GoGurt, with sales up 8% to $122 million.
Meal Kits
The fledgling category has gained speed as families of four seek fast, easy,
affordable dinners for $10. Old El Paso developed meal kits to revive weekly
"taco nights." General Mills also makes Macaroni Grill pasta kits for family
dinners. U.S. retail sales for the first nine months of fiscal 2010 are up 4%.
Baking
The once-languishing category rebounded in the recession, but branded players
have hit snags this year, following intense price pressure. General Mills'
baking segment, which includes Pillsbury and Betty Crocker, posted a 1% sales
increase for the first nine months of fiscal 2010.
Soups
General Mills' Progresso was once the darling of its center-store offerings,
reviving the ready-to-serve soup segment with TV ads focused on weight
management. But the entire category has suffered recently. According to IRI,
Progresso sales are down 9% over the last year to $351 million. Mr. Addicks
blamed a bruising series of comparative ads between Progresso and Campbell more
than a year ago that "got the category off course."
Source:
Advertising Age | April 12, 2010 |