BOCA RATON, FLA. — It has been two years since General Mills, Inc. took over share leadership in the U.S. ready-to-eat cereal category, and the company is showing no signs of slowing down.
“Our success is grounded on strong performance against fundamentals, including innovation, great marketing and excellent in-store execution, which have combined to drive our fiscal year-to-date retail sales up 2%,” Jeffrey L. Harmening, chairman and chief executive officer, said during a Feb. 18 presentation at the Consumer Analyst Group of New York Conference in Boca Raton. “And we’ve seen the cereal category improve significantly in recent years. In fact, we estimate retail sales for the $8 billion U.S. category were flat in calendar 2019, when including non-measured channels, compared to low single-digit declines just a few years ago. We believe this category improvement has been driven by a combination of our stronger performance and some improving macro and demographic trends, including a stabilization in the balance of breakfast eaten at home versus away from home as well as a return to growth in the number of households of kids in the U.S.”
Mr. Harmening said General Mills’ strategy to drive growth in the category has centered on launching compelling innovation that offers taste, convenience and health benefits.
In the first half of fiscal 2020, General Mills was responsible for five of the top six new cereal launches in the United States, Mr. Harmening said. Keeping its foot on the innovation pedal, General Mills recently introduced Hershey’s Kisses and Trix Trolls cereals, products that Mr. Harmening said “further strengthen our position in the fast-growing taste cereal segment in the U.S.” Additionally, the company is branching out into product forms that command premium price points, including new Morning Summit cereal, which has almonds as a first ingredient and retails for $13 a box in the club channel.
General Mills has extended innovation to its away-from-home channels as well.
“Cereal net sales for our Convenience Stores & Foodservice segment were up mid-single digits through the first half of fiscal 2020 behind strength in schools, due in large part to our new 2-oz equivalent grain cereal cups, which are an easy way for schools to meet the U.S.D.A. nutritional requirements while requiring less storage and labor,” he said.
Another component of General Mills’ strategy in cereal revolves around investing in brand building that engages consumers.
Mr. Harmening said the company is connecting its consumers through compelling marketing ideas. He pointed to the company’s Cheerios heart health campaign and Cinnamon Toast Crunch’s Cinnaverse campaign as examples of General Mills combining meaningful innovation with smart marketing.