General Mills readies assault on cereal crown

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General Mills is cranking out a nutritional advertising blitz for its children's cereals, while at the same time preparing to launch its first organic cereal.

The moves come as Big G seems ready to topple rival Kellogg Co.'s category-leading dollar share in supermarkets. Although there remains a four share-point spread in unit sales, perennial No. 2 General Mills is a mere three-tenths of a share point behind on a dollar share basis.

According to figures from Information Resources Inc., General Mills held a 31.5% dollar share for the 52 weeks ended Nov. 29 and Kellogg had 31.8%.


"General Mills has narrowed the share gap considerably," said Robert Cummins, a Schroder & Co. analyst. "It's not only a sign of success for General Mills, it says something about Kellogg, which used to be at least 10 share points ahead."

Big G might make its move with the new cereal, called Sunrise. The line, which begins shipping to retailers in March, represents one of the first brands from a mainstream marketer to tap the organic segment, estimated by General Mills as a $4 billion business that's grown 300% since 1990.

But because organics are still essentially considered a niche product and because marketing expenditures are based on first-year sales

Cerealestimates, Big G isn't expected to spend much more than $15 million to $20 million to market Sunrise in its initial stage.

It's believed Campbell Mithun Esty, Minneapolis, has been assigned the product, although that couldn't be confirmed at press time.

"It will be a low-key introduction. They hope to build on it, but it won't be a huge grand slam," Mr. Cummins said.

Sunrise, a corn and whole wheat blend, is said to visually resemble Kellogg's Crispix brand. General Mills told analysts in a recent briefing that the new brand had tested strong with consumers and that it will carry a "certified organic" seal.


According to the Organic Trade Association, sales of organic cereals grew 40% from 1992 to 1997, although an overall sales figure for the category wasn't available.

The Sunrise launch will dovetail with the start of national advertising for General Mills' Honey Nut Chex, which was delayed following a product shortage. Observers are predicting that extension will be a hit, noting that it achieved a 1.6% share in the 20% of the country in which it is now available.

Saatchi & Saatchi, New York, has that brand, and also is handling the network TV effort beginning this month to support higher calcium-fortification levels on eight of Big G's kids cereals. That effort represents incremental ad spending, indicated Eric Larson, senior VP-investor relations at General Mills.

"There will be a fair amount of media and public relations behind it," Mr. Larson said. "It's sufficiently big news that we want to generate awareness."


Although General Mills won't give specific spending figures, if the fortification ad push were to match Kellogg's outlays for its umbrella effort to boost sales, themed "Cereal. Eat it for life," then the spending could top $10 million.

The nutrition effort will support brands that represent 44% of General Mills' cereal volume, according to Merrill Lynch analyst Eric Katzman, including Honey Nut Cheerios, Kix, Lucky Charms, Cheerios, Golden Grahams, Frosted Cheerios, Team Cheerios, Cocoa Puffs and Apple Cinnamon Cheerios.

The campaign will cite a medical study that found 72% of children between the ages of 5 and 12 don't get enough calcium in their diets. The TV spot will tout the fact that a serving of Big G cereals, with milk, can provide 25% of kids' calcium needs.

The boxes will carry a special yellow emblem.

Big G's analyst briefing came within days of Kellogg's own announcement of its K-Sentials program to fortify its cereals, the project given to the Martin Agency, Richmond, Va., the new agency on Kellogg's roster, and its new specialty cereals called Country Inns.


Industry observers are lauding the nutrition moves as a much-needed back-to-basics movement by the industry, which saw both dollar and unit sales decline 2% for the 52 weeks ended Nov. 29, according to IRI.

"It's constructive that the cereal industry is getting back to featuring the value of its brands rather than price cutting," said Mr. Cummins, who noted that in the first half of last year, Kellogg's ad spending was in decline while General Mills' rose 30%. Contributing: Laura Petrecca

Copyright January 1999, Crain Communications Inc.

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