Powell: Cereal struggles ‘not a consumer issue’

by Eric Schroeder
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BOCA RATON, FLA. — When it comes to the slowdown in the ready-to-eat cereal category, it’s not a consumer issue, said Ken Powell, chairman and chief executive officer of General Mills, Inc., during a Feb. 18 presentation at the Consumer Analyst Group of New York conference in Boca Raton.

Instead, Mr. Powell said sluggish category sales and volume reflect insufficient product news and advertising by branded cereal competitors.

“(It’s) not them, not those consumers, it’s us,” Mr. Powell said. “New products are one source of category news and over the past five calendar years, the number of new cereals and their share of category sales have held pretty steady, but new products don’t all sustain. We need more relevant new product innovation and, more importantly, news on established products is critical for category growth.”

Mr. Powell said consumer marketing is key to category growth, and over the past four years, cereal advertising has declined 4% and cereal has lost “share of voice” among food and beverage categories. General Mills has tried to do its part, he said, increasing its levels of advertising support on cereal brands well above its share of market.

“We are staying very focused on core brand renovation, new product innovation and strong consumer marketing to drive our top-line growth in cereal,” Mr. Powell said. “We are adding more gluten-free varieties to our Chex cereal line and retail sales for that franchise are up 6% in the latest 12 months. We launched Nature Valley Granola with 10 grams of protein per serving and new Fiber One protein cereal started shipping in January. It delivers 10 grams of protein and 20% of the daily value of fiber per serving, and this is just the start. We have more protein news coming later this year.”

General Mills also has ramped up its marketing program geared toward Hispanic consumers. Initiatives include in-store events and product sampling, efforts that have helped General Mills’ cereal sales outpace category growth among Hispanic consumers. Elsewhere in the cereal aisle, natural and organic products are showing “good” growth in the natural channel and mainstream outlets, Mr. Powell said, adding the company is seeing even faster growth from its Cascadian Farm organic cereals across retail formats.

Mr. Powell said General Mills also has raised the profile of its cereal advertising. Lucky Charms appeared during the Grammys, and a Cheerios advertisement ran during the Super Bowl.

“Several media journals ranked it among the 10 best ads of the game, and it generated a lot of consumer and media buzz,” Mr. Powell said of the Cheerios advertisement. “With our focus on health news, innovation and advertising support, we have been growing our net sales and gaining dollar share. We are confident that this same recipe played out on a broader industry scale will renew category growth.”
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