General Mills’ new digital rewards program, marketing drive sales, consumer loyalty

By Elizabeth Crawford contact

- Last updated on GMT

Source: General Mills
Source: General Mills

Related tags: General mills, Marketing, Totino's, Loyalty program

General Mills is gaining market share and driving higher sales despite ongoing supply chain challenges and price hikes thanks in part to strategic investments in brand building and digital consumer engagement, including through a new rewards program, as well as expanded production capacity for popular key brands.

In the company’s first quarter of 2023 ending Aug. 28, the CPG saw organic net sales climb 10% to $4.7b and adjusted operating profit increase 8% as it pushed forward with its three-prong Accelerate strategy, which includes continuing to compete effectively, investing for the future and reshape its portfolio.

Under the first prong, General Mills was able to hold share in 56% of its priority business, which includes iconic brands such as Cheerios, Pillsbury, and Totinos as well as ‘local gems,’ like Kitano seasonings and Wanchai frozen dumplings.

“A key enabler for these results as has been our continued peer-leading performance in customer service,”​ which allowed the business to out-perform its competition in on-shelf availability in Q1 in its top 10 US categories, CEO Jeff Harmening told investment analysts Wednesday.

This included a 1.5% improvement in on-shelf availability of hot snacks, followed by 1.1% improvement in fruit snacks, a 0.9% increase in salty snacks, a 0.7% increase in refrigerated baked goods, 0.6% increase in soup, 0.5% in desserts and 0.4% in the highly competitive cereal segment.

The company is also engaging with consumers in new ways, including digitally through the July launch of its Good Rewards portfolio-wide loyalty program in the US.

Working with Fetch Rewards, the first of its kind program for General Mills was designed to “showcase our brands, drive engagement and loyalty with consumers and help families stretch their dollar to make meals more accessible,”​ Harmening said.

“In the first two months since Good Rewards was launched, we already have 700,000 subscribers, which is well over halfway to our annual goal of 1 million. And we are ahead of our expectations on user engagement and conversion as well,”​ he added.

Harmening explained that by shifting the company’s efforts to this digital platform it can “react more quickly and effectively to drive stronger consumer engagement in a dynamic market.”

The decision to go digital reflects a shift in how consumers interact with brands and allows General Mills to offer more personalized rewards that meet shoppers’ unique needs – an ability that likely will gain importance in the coming months as rising inflation continues to pinch consumers and shift their shopping habits.

“Significant inflation and reduced consumer spending power has led to an increase in at-home eating and other value-seeking behaviors”​ that are softening the negative impact of price increases related to rising cost inflation, Harmening said.

He explained that General Mills now expects input cost inflation to rise 14-15% in fiscal 2023 across its cost basket, “including significant year-over-year increase in raw materials, labor, freight and fuel."

As General Mills seeks to drive consumer and customer demand for its products despite higher prices it also is investing in its manufacturing capacity across key platforms, including fruit snacks, hot snacks, Mexican food, cereal and pet food, Harmening said.

Totino’s growth demonstrates the power of digital engagement

These strategies already are paying off for General Mills as illustrated in the exponential growth of its frozen pizza and hot snacks brand Totino’s, which crossed the $1b retail sales line to become the company’s 9th​ billion-dollar brand alongside Cheerios and Nature Valley.

Between fiscal 2022 and fiscal 2019, Totino’s grew at a compound annual rate of 7% -- nearly twice that of the previous three years.

This was possible thanks in part to investments in social media, including TikTok where the brand received more than 30 million views and a partnership with the media platform FaZe to better connect with the vibrant gaming community with the launch a highly requested Buffalo Chicken Wing version of its pizza rolls that could be enjoyed without hitting the pause button.

“As the Totino’s business has continued to grow, we’ve increasingly faced service challenge in recent years as we’ve bumped up against supply and capacity constraints,”​ Harmening said.

In response, the company developed alternative formulations as work-arounds for missing ingredients and it recently approved a significant capital expansion project at its Wellston, Ohio, manufacturing facility to supply future growth, Harmening explained.

[Editor's note: Want to know more about the fast evolving snacking space? Join FoodNavigator-USA, General Mills' Good Measure and others Sept. 27 for a free webinar looking at healthy snacking trends. Learn more and register HERE​.]

Higher than expected sales are silver-lining on darkening economic landscape

Thanks in part to these brand building efforts and a return to eating at home by many consumers as they navigate higher prices across the board, General Mills now expects full-year volume elasticities will be lower than initially projected and demand to be higher – allowing it to raise its full-year outlook for fiscal 2023.

The company now expects organic net sales to increase 6-7%, constant currency adjusted operating profit growth to be as high as 3% and constant-currency adjusted diluted earnings per share to be up 2-5%.

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