BOSTON — While the ready-to-eat cereal category has been challenged in developed markets in recent years, General Mills, Inc. has noticed a different story in emerging markets, where the Minneapolis-based company’s share grew 4% during the past year.
“Our strategy for growth in emerging cereal markets is simple: focus on driving per capita consumption,” Chris O’Leary, executive vice-president and chief operating officer of international, told participants during a Sept. 4 presentation at the Barclays Back-To-School Consumer Conference in Boston.
Turkey and Brazil are two emerging markets in which General Mills has seen success.
Mr. O’Leary said per capita cereal consumption in Turkey has nearly doubled over the past five years, and during that time General Mills’ Fitness brand has contributed half of the category’s growth.
“We’ve driven this success with advertising that clearly communicates this brand’s weight management benefit and by leveraging key seasons like New Year’s or pre-summer when consumers are more likely to be looking for weight management offerings,” he said. “In addition, we undertook a massive sampling campaign covering 80% of all supermarkets in major cities to introduce cereals to Turkish women. As a result of our efforts to grow the category with new consumers, Fitness now enjoys a 15% market share in Turkey, and that's the entire category, 15% share of all cereals, not just weight management cereals.”
In Brazil, per capita cereal consumption has more than doubled over the past five years, Mr. O’Leary said, with General Mills’ Nescau and Nesfit brands contributing more than 40% of the category’s growth during that time. He said the company has introduced new package sizes for both brands, including large sizes to drive consumption and small sizes to expand distribution into smaller format stores. General Mills also has increased television and digital media support to communicate consumer benefits.
“So we’ve shown that we can grow cereal consumption in emerging markets, and we believe there’s much more to come,” Mr. O’Leary said. “In fact, if you look back at cereal category development you can see it’s tightly correlated with G.D.P. (gross domestic product). So with the long-term expectation for strong G.D.P. growth in emerging markets we expect the cereal category in these markets will also show solid growth.
“And with No. 1 market shares in many emerging markets, including Southeast Asia, Turkey and Russia, C.P.W. (Cereal Partners Worldwide) stands to benefit significantly from continued cereal growth in these markets.“I think there are a host of reasons why cereal will be a terrific growth category for years to come. Cereal offers all the key attributes consumers want from their foods: taste nutritious, nutrition, convenience and value.”