The sales slowdown in the US cereal category has nothing to do with consumers and everything to do with manufacturers, says the chairman and CEO of General Mills.
Speaking to analysts yesterday at the CAGNY conference in New York, Ken Powell said that while cereal remained a top-10 food and a first choice among Americans at breakfast, sales had slowed. But, he said this was not a reflection of consumer trends.
“The slowdown in category sales in volume isn’t a consumer issue, it’s due to insufficient product news and advertising by branded cereal competitors,” he said.
“Not them; it’s not those consumers, it’s us,” he added.
A lack of NPD and advertising in the cereal aisle
For five years new product development in the cereal category had slipped with the number of new cereal launches “pretty steady”.
“We need more relevant new product innovation and more importantly news on established products is critical for growth,” he said.
'We need more relevant new product innovation and more importantly news on established products is critical for growth,' says General Mills CEO and chairman
Advertising had also slumped, he said. “Over the past four years, cereal advertising has declined 4% and cereal has lost share of voice among food and beverage categories.”
However, he said that General Mills had worked to up its ad spend. “We’re staying very focused on core brand renovation, new product innovation and strong consumer marketing to drive our top line growth in cereal,” he said.
The CEO said that General Mills would focus on four growing consumer groups – older consumers, millennials, middle-class consumers in emerging markets and multicultural families in the US. The latter, he said, represented over one-third of the US population, “and that percentage is growing rapidly”.
In particular, he said that Hispanic consumers in the US held growth opportunity – given that by 2060 more than half of the US population will be multicultural with Hispanics leading this growth.
“Hispanic consumers are family orientated and they value leading consumer brands,” he explained – a factor that General Mills would be able to appeal to.
All quotes were sourced from the SeekingAlpha transcript on this conference.