General Mills has indicated that it will remain focused on its long-term growth model, investing in the strength of its brands in order to drive sales as economic conditions worsen.
Addressing an analyst conference in Florida yesterday (17 February), General Mills’ management said the company is gaining US market share through key brands across a number of categories, in spite of poor trading conditions.
“We’re meeting here in Florida at a time of great economic uncertainty around the world,” CEO Ken Powell told his audience at the Consumer Analyst Group of New York (CAGNY).
“General Mills has weathered the storm due in large part to the strength of our product categories and the strength of our brands.”
The group has seen market share gains in grain snacks with Nature Valley, cereal with Cheerios and Fibre One, soup with Progresso, yogurt with Yoplait and hot frozen snacks with the Pillsbury brand, the company revealed.
US household penetration has increased from 27% in 2003 to 36% in 2008 and ready-to-serve dollar market share has increased from 26.3% to 34.0% over the same period.
“Innovation and margin expansion are the bedrock of what we do,” Powell emphasised. “Beyond these fundamentals we will also invest in consumer marketing to build our brands, partner with customers to grow their businesses and ours and expand internationally.”
General Mills revealed that it is planning a number of new product launches in the remainder of the fiscal – including Banana Nut Cheerios, Cinnamon Chex, and Fiber One Frosted Shredded Wheat cereals.
The company said that while it has succeeded in pushing price increases through, now that commodity prices have stabilised it expects volume growth to drive sales gains.
In order to achieve increased volumes, General Mills is putting more marketing support behind its brands.
Unlike other food industry majors, General Mills has increased its consumer marketing spend by 19% in the first half of 2009. Ian Friendly, chief operating officer of US retail operations, said that full-year consumer-marketing spending would likely be up by “double digits”.
General Mills’ sales have responded well to increased marketing at a time when economic conditions are prompting consumers to eat more at home, the company said.
Sales grew by 11% in the first half of fiscal 2009 to US$7.5bn. The company has raised guidance with each of the first two quarters and management reiterated its latest revised guidance for EPS of $3.83 to $3.87 for fiscal 2009 yesterday.