General Mills is ‘rebuilding’ its marketing spending

The company is boosting spend to not just invest in big brands, but get high-quality first-party data on its consumers.

Cheerios

General Mills is taking a holistic approach to increasing its marketing spend, not just making investments in strengthening its brands, but also its data capabilities in both bricks-and-mortar and ecommerce.

In the first quarter of the company’s 2021 fiscal year, net sales were up 9% to $4.4 billion globally. Sales were up 14% for its North American retail segment, and 3% in Canada (5% when excluding the impact of currency exchange rates). This reflects an “increase in demand for food at home,” according to chairman and CEO Jeff Harmening, reflecting a sentiment most major CPG companies have expressed in the months following the onset of the COVID-19 pandemic.

The company also reports that Canada is among the key markets where it grew or held share, including a 3% growth in yogurt. In the U.S., which represents roughly three-quarters of its business, share grew in eight of its top ten food categories. IT is also reporting stronger growth for refrigerated baked goods, dessert mixes, and soup.

“We’ve seen a seismic shift in how people eat, with an increase in demand for food at home and a corresponding decrease in demand for food eaten away-from-home,” Harmening said during an investor call, adding that “breakthrough brand building” is a key to improving stickiness of demand. “Since the onset of the pandemic, we’ve increased our media investment and adjusted the way we reach consumers to meet their current needs.”

In its earnings call, the CPG brand also says that it is increasing its marketing spending, looking to grow it faster than sales this year. Harmening described it as “rebuilding” its marketing spending – it is prioritizing “big brands” and activities that drive business, with a significant shift to where consumers are increasingly spending their time, including digital marketing and e-commerce platforms. Pre-pandemic, General Mills’ online sales were roughly 4% of total sales; today, it has grown to 8%, a trend the company expects to continue as consumers who come in through those channels tend to be highly satisfied with their experience.

“We’re not just spending on our brands, we are actually investing,” he said.

In response to an analyst observation that the cereal category seems to still be relying heavily on promotion, despite the fact that more consumers are eating breakfast at home, group president of North American retail Jonathon Nudi said that promotion levels were not dramatically different, but rather that the company was leveraging its “entire strategic revenue management toolbox.” While retail partners want to promote cereal to drive traffic to the centre of the store, it has been working on price pack architecture, since there is “a lot more cereal sold in larger sizes,” an important way to drive price in the category. Across categories, General Mills is working with retail partners to go about promotion with less debt, as well as ensuring things like displays are in the right stores at the right time of year by having a more granular understanding of its customers.

General Mills has also made investments in its data capabilities, going more aggressively after first-party data in both ecommerce and bricks-and-mortar. For example, it digitized its long-running Box Tops for Education fundraiser, getting data from over 25 million receipts. It is also gaining data from the Betty Crocker and Pillsbury websites, which have more than seven million unique monthly visitors looking for recipes, and connecting that to its ecommerce capabilities.

Harmening adds that with so many new consumers trying its brands, General Mills is also renovating its portfolio to improve product taste and texture. This includes adding more fruit to Original Style Yoplait, and modernizing the nutrition profile of Fiber One brownies, for example. Brand innovation is going to be “critical to its business,” Harmening says, citing keto diet-friendly products and Cinnamon Cheerios.

Featured image by Mike Mozart.