BIG G, HERSHEY SET REESE'S CEREAL

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While Kellogg USA borrows the Healthy Choice name, General Mills has its own new licensed cereal: Reese's Peanut Butter Puffs.

Big G's new kids cereal, mimicking the Hershey Foods Corp. candy with a peanut butter middle inside a round chocolate coating, is being launched first on the East Coast. It's expected to roll out nationally by midsummer.

General Mills is telling retailers it will spend $35 million to introduce the Reese's cereal, with advertising from Saatchi & Saatchi Advertising, New York.

Although the cereal concept likely was hatched under former Big G President Dave Murphy, it's familiar ground for Charles Gaillard, who began his second stint heading General Mills' cereal division in December. During Mr. Gaillard's first tenure as Big G president, General Mills introduced cereal "analogs" of cinnamon toast, graham crackers and ice cream cones.

General Mills has had a string of lackluster new products, including Sprinkle Spangles, Ripple Crisp and Fingos. Cereal industry observers were surprised by the marketer's interest in a chocolate cereal; though big in Europe, cocoa-flavored cereals traditionally have not done well in the U.S. Kellogg's Cocoa Krispies has only $44.2 million in sales, and a 0.6% share, according to Information Resources Inc.

Meanwhile, Quaker Oats Co.'s Peanut Butter Crunch, one of several Cap'n Crunch varieties, accounts for less than a fourth of the brand's total 2.7% share and $212.9 million in sales.

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