The $10bn US cereal category has been in a state of decline for the last decade, with consumption down 1% each year, according to Rabobank research.
General Mills reported a US net sales decline of 2% during fiscal 2013 for its ‘Big G’ cereals – its whole grain products including Cheerios, Chex, Fiber One, Lucky Charms and Wheaties - despite overall US Retail Division sales being up 1%. Globally, net sales for all packaged food business rose 7%.
Despite this decline in net sales for its cereals, CEO and chairman of General Mills Ken Powell said the firm has worked well to battle against this decline and broader downward market trend.
Discussing some of the firm’s cereal portfolio like Cheerios and Chex, Powell said: “We see plenty of evidence that when we get the message right, when we get the innovation right, these brands respond.”
The firm has refreshed and shifted its Cheerios advertising recently, he said, which has stabilized the brand earnings. “This is all behind better messaging and around the health benefits of that product. So we look at it as down to us,” he said.
With the Chex brand, he said there has been stronger communication about the gluten-free benefit which has boosted growth.
“Where we see baselines that are a little bit weaker or declining, it always has something to do with what we’re doing or not doing,” he said.
“For cereal, the path forward is always brand by brand renovation and execution.”
“…There are lots of signals that we’re not victims here. If we get the innovation right, we’ll do just fine. It’s on us, and we like what we’ve got in the pipeline for next year.”
Kids’ cereal for adults
General Mills CFO Don Mulligan recently said the firm’s kids’ cereal brands remained strong, not just because of appeal among the younger generation, but adults too.
Around 40% of Lucky Charms consumers are adults, not kids, he pointed out at a recent Citi Global Consumer Conference.
Discussing this trend, Powell said General Mills has adopted new marketing strategy for some of its stalwart kids brands.
“Lucky Charms, Cinnamon Toast Crunch, Reese’s Pieces, these are great products. We’ve had very good growth from those. And one of the things we’re seeing here over the last year is as we advertise those products, those traditional kid brands, to adults, we’re seeing nice bounces in baseline, just by reminding adults how these products taste,” he said.
General Mills will continue to market some of these kid brands to adults, he said. “Adults may be looking for some variety and they love the way those products taste.”