US consumer goods firm General Mills, which owns Häagen-Dazs, Old El Paso and Cheerios, increased its media investment by “double-digits” in the last quarter and expects it to continue to grow throughout the coming year.
This comes after the business shared details early this year suggesting it was committed to stepping up its investment in brand building campaigns to keep its brands “relevant”.
General Mills ups marketing investment after crediting brand building for five-year growth streakPosting its first quarter 2024 fiscal year results, the business’s sales grew 4% globally to $4.9bn (£3.95m), with its European markets doing particularly well with 10% growth. However, it’s operating profits are down 14% to $930m (£750m) for the quarter, which it attributes to increased administrative and selling costs.
The business is sticking with its recent commitment to brand building as it looks to get back on track with profitability. “I think it’s important for us to put brand support behind quality ideas,” said Cofi Bruce, General Mills’ CFO, on a call with investors today (20 September). “And especially so as we see the environment stabilise,” he added.
That environment is one of “moderating inflation, stabilising supply chains, and a resilient but increasingly cautious consumer,” according to the business’s CEO Jeff Harmening.
Private label headwinds
FMCG companies have struggled with supply chain issues in the last 18 months, from the impact of the war in Ukraine to environmental and staffing problems. However, General Mills’ availability to consumers on the shelf is “better this year than last year,” said Jon Nudi, group president for North America retail at the company. However, he added: “What’s remarkably different [this year] is our competitors, in particular private labels,” citing the increase year-on-year of them on the shelves.
“So while that was a tailwind for us when we were on the shelf and private label wasn’t, it’s a headwind this year.”
The pets division had flat sales growth in Q1, however it posted a profit increase of 10% from $111.2m (£89.7m) to $123.1m (£99.3m).
General Mills hopes to quicken growth in its pets business by “going back to smart, hard hitting advertising,” said Harmening, while it is also reviewing its pricing and packaging, such as with the introduction of medium sized dry pet food packages, rather than sticking with “lots of large sizes”.
The business will continue to focus on its long-term profit driving plan, which it calls its ‘accelerate strategy’ to prove its value to investors. “With confidence in our plans and our ability to adapt to continued change in the consumer landscape, we are reaffirming our guidance for fiscal 2024,” said Harmening.