Del Monte To Hike Marketing Spend By 40%+

Del Monte Fruit Chillers

Del Monte Foods is further accelerating its already pumped-up marketing budget for its fiscal 2010.

The company, which originally planned to increase its marketing budget by between 30% and 40% compared to fiscal 2009, announced in its financial report for the first quarter of the new fiscal year that it will instead hike marketing spending by 40% to 50%.

Increasing marketing investment to drive sales of Del Monte's core brands and higher-margin businesses is a key component of the company's accelerated growth plan. During the first-quarter financials call, president/chairman/CEO Rick Wolford said that the "very encouraging" results now starting to be realized from last fiscal's increased investment supported the wisdom of increasing the marketing budget for the current year.



Wolford said that marketing spending increased by only 11% in the first quarter as a result of delayed spending in its pet products division reflecting concerns about optimizing execution, but will accelerate during the remainder of the year.

One area of both marketing and production innovation investment focus is packaged produce, Wolford confirmed. Del Monte saw strong first-quarter net sales growth in this business, and a four-point share gain.

Del Monte pleased investors and analysts by reporting $58.9 million in first-quarter income from continuing operations, for EPS of $0.30, versus a loss of $8 million and negative EPS (-$0.04) for the same period last fiscal -- and by raising its EPS guidance for the current fiscal to $0.88 to $0.92 (compared to previous guidance of $0.76 to $0.80).

First-quarter net sales rose 12%, to $813.7 million. Consumer products sales rose 4.7% to $401.4 million, largely driven by benefits from fiscal '09 price increases. Sales from new products, including Del Monte Fruit Chillers Tubes and new packaged produce items also contributed to growth. Pet product sales grew 20.3% to $412.3 million, driven by strong unit volume growth in pet snacks, in particular, plus last fiscal's price increases.

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