General Mills seeks to reverse Big G sales decline

by Jeff Gelski
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MINNEAPOLIS – General Mills, Inc. is introducing new cereals and taking new approaches to promote traditional brands as it attempts to ignite Big G cereals sales, which declined 2% in the third quarter ended Feb. 24.

General Mills launched a Fiber One 80 Calorie chocolate cereal that offers 35% of the adult daily value of fiber per serving, said Ken Powell, chairman and chief executive officer of the Minneapolis-based company in a March 20 earnings conference call. For another product introduction, Peanut Butter Toast Crunch joined the Cinnamon Toast Crunch franchise.

The company launched Honey Nut Cheerios Medley Crunch in the third quarter.

“In the U.S. cereal category, after five consecutive years of market share gains, we’ve lost a bit of share so far in 2013,” Mr. Powell said. “But as our levels of merchandising improved in the third quarter, our share trend has also improved, and we expect further improvements in the fourth quarter with both established brands and new cereals contributing to our momentum.

“For example, a new advertising campaign is reminding consumers about the simple goodness of our iconic original Cheerios. Baseline trends are improving in response to this message.”

Adults consume nearly half of all Lucky Charms cereal, he said.

“So we have expanded our marketing efforts to include new advertising that targets adults, and results have been terrific,” Mr. Powell said. “Since the new campaign started in January, Lucky Charms’ baseline sales have increased 16%.”

Retail sales of Lucky Charms are up 6% in the fiscal year to date. Big G cereals are in General Mills’ U.S. retail segment. General Mills increased U.S. dollar market share of cereals to 31.5% in fiscal year 2012 from 29.7% in fiscal year 2008, but that market share dropped 0.7 percentage points in the first half of fiscal year 2013.

Mr. Powell acknowledged the cereal category overall has seen competition increase for breakfast share recently.

“Hot breakfast, just eggs and bacon and that sort of thing, we are seeing a little bit of resurgence there,” he said. “So that I think is a competitive element.”

He said the snack bar category competes with cereal for breakfast share. General Mills has had success in bars and recently launched Fiber One Protein bars.
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