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General Mills CFO: ‘The strength of our cereal business is rooted in the breadth of our portfolio’

By Kacey Culliney , 10-Jun-2013
Last updated on 27-Jun-2013 at 15:43 GMT

40% of Lucky Charms consumers are adults, not kids. Credit: speakin-colors.blogspot
40% of Lucky Charms consumers are adults, not kids. Credit: speakin-colors.blogspot

The breadth of General Mills’ portfolio and targeted marketing enables the company to stay strong in the cereal sector, its CFO says.

Don Mulligan, speaking at the Citi 2013 Global Consumer Conference, said cereal is General Mills' largest global business.

“The strength of our cereal business is rooted in the breadth of our portfolio. Our cereal brands deliver on a number of attributes important to consumers, from the cholesterol-lowering benefits of whole grain oat Cheerios to the all-family appeal of Cinnamon Toast Crunch and Lucky Charms, to the great taste of gluten-free Chex. These brands shown here represent over 20% of cereal category sales,” the CFO said.

Mulligan said that for the 2014 financial year ready-to-eat cereal will be one of its focus points, alongside wholesome snack bars, super premium ice cream, convenient meals and yogurt.

According to Euromonitor International data, General Mills holds the second position for global cereal sales with a retail value of 10.6% in 2011. Kellogg holds the top spot with a 32.1% retail value share in 2011.

Targeting the ‘right audience’

General Mills is very conscious of its broad consumer demographic in the cereal sector and works to tailor marketing accordingly and target the “right audience”, he said.

Driving growth is about “the right idea and advertising to the right consumers”, he added.

For example, adults account for almost half (40%) of Lucky Charms consumption, even though it is predominantly considered a kids’ product. In response to this, General Mills launched adult-targeted advertising back in December which boosted sales, Mulligan said.

‘Demographic trends bode well’

Despite recent stagnation in the US cereal category, the CFO said cereal remains “very on-trend” with consumers due to its convenience, affordability and health values.

He said that future demographic trends bode well for the US cereal category in the years ahead, noting that over the balance of the current decade, children 21 and under and adults 55 and over are projected to account for over 80% of total US population growth.

“These groups have the highest rates of per-capita cereal consumption. So we expect these trends to provide a tailwind to category growth in the years ahead,” he said.

Global cereal category poised for growth

Mulligan said that globally, the cereal market will surge over the next few years.

“That’s because more than half of today’s cereal consumption happens in just four countries – the US and Canada, and the UK and Australia. But these markets represent only 6% of the world’s population. For the remaining 94% of consumers, cereal eating occasions per capita are still quite low, so we see great opportunity ahead for our cereal business.”

The CFO said a lot of growth from emerging markets such as Central Europe, Latin America and Asia would be captured by its joint venture business with Nestlé – Cereal Partners Worldwide (CPW).

“Developed markets still represent the largest portion of CPW sales but CPW holds leading market positions in many emerging markets including Central and Eastern Europe and Asia,” he said. 

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