Fresh off strong growth this
spring, General Mills plans to increase domestic marketing spend over the next year by high-single-digit percentages.
The forecast, partly the result of more Americans eating at
home, comes as many advertisers are having trouble devising upfront-spending strategies, due to uncertainty about their fortunes in the year ahead. General Mills' projected jump comes after the
company upped spending by 25% in the March-May period, its fiscal fourth quarter.
"This reinvestment is fueling net sales growth," CEO Ken Powell said on a conference call with investors. He was
referring more broadly to a 16% increase in global consumer marketing outlays for the company's 2009 fiscal year, which also ended May 31.
In the U.S., the marketer of Cheerios and Yoplait
yogurt said retail sales increased 12% in the March-May period to $2.5 billion. The company said operating profits were up 30%, even with the increased marketing spend.
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On the call, Ian
Friendly, who heads the U.S. retail business, said the company will "continue to invest to keep [its brands] healthy and relevant."
Tactics include increasing spending behind a campaign for
Honey Nut Cheerios targeting Hispanics, while pushing more messages about health benefits dovetailing with the growing baby-boomer population.
Friendly said General Mills' spending targeting
Hispanics has tripled over the past three years; the population segment has been a growth driver for the company.
The company defines "consumer marketing spending" as advertising, promotions
and other initiatives. For the full year 2008, it spent some $688.8 million in U.S. ad dollars -- up 23% over 2007, according to TNS Media Intelligence.
In the first quarter of 2009
(January-March), U.S. ad spending climbed 31% to $192.2 million, according to TNS.
General Mills' 2009 fiscal year saw U.S. retail sales increase 11%, surpassing $10 billion for the first time
(by $52 million). And net sales for its cereal business, highlighted by Cheerios, were up 11%.