In January, Kellogg will launch a $20 million promotional extravaganza with Walt Disney Co., using every weapon in the cereal giant's marketing arsenal to tout free Disney "mini-beans" plush toys inside product boxes, as well as a sweepstakes to win trips to Walt Disney World.
The effort -- like previous tie-ins with Nintendo of America's Pokemon and "Sesame Street," and an upcoming link with Universal Pictures' "How the Grinch Stole Christmas" -- is an attempt to stem continued declines for Kellogg's flagship business.
Information Resources Inc. data show volume sales for Kellogg's cereals for the four weeks ended Sept. 10 were down 6.1% from the previous year. Meanwhile, category leader General Mills saw volume sales grow 7.9%.
A LESS-THAN-STELLAR RECORD
"Everyone knows and loves Disney characters," said Credit Suisse First Boston analyst David Nelson, but he also voiced reservations, given Kellogg's less-than-stellar track record with "tactical promotions."
Although previous efforts offering American Airlines mileage points and a Pokemon tie-in seemed to spark some sales, Mr. Nelson said the first-quarter "Sesame Street" promotion "didn't seem to move the needle."
A Midwestern grocery executive put it more bluntly: "Kellogg is in such a state of screwup that I don't know whether I'll be able to support the [Disney] program, because they'll likely botch it somehow. If they could execute the program, it could help them. But they don't have enough people, and they don't have the right people."
Such lack of retailer confidence could prove a promotion killer. The same grocery executive pointed to the whopping success of General Mills' back-to-school promotion of free CD-ROM games inside a variety of cereals. That effort helped drive the sale of 25,000 boxes of General Mills cereals in his stores in one week when the typical take is roughly 8,000 boxes.
The reason for the success? "I put blood, sweat and tears into promoting that program, putting special bursts on in-store ads and making sure it was displayed prominently," the grocery executive said.
An East Coast grocery executive called Kellogg's Disney effort a "great idea, something that's an excitement creator that can drive incremental sales with no cost to the retailer." But he fears the company might "create too much excitement and then not have enough to go around."
Even an internal Kellogg salesman voiced concern that the heavily hyped Disney promotion "seems very attractive on the surface but is difficult to execute at the store level."
That said, Kellogg will invest heavily behind the first-quarter effort, the first in which Disney has allowed a manufacturer to use its characters in plush form, according to Kellogg sales materials.
More than 80 million boxes of presweetened cereals, such as Apple Jacks, Froot Loops and Frosted Flakes, will contain one of 16 Disney character mini-beans, among them Mickey Mouse, Winnie the Pooh, "Toy Story's" Buzz Lightyear and "The Lion King's" Simba.
TV spots from Leo Burnett USA, Chicago, will run in January and February touting the free mini-beans as well as mail-in offers for additional characters and a wall hanging to hold the whole set.
The promotion also features an instant-win sweepstakes on more than 50 million cereal boxes, offering 10 consumers who find a Goofy plush toy inside grand-prize "Walt Disney World Friendship Tours," a trip to the theme park with 10 friends.
Another sweepstakes on Rice Krispies Treats offers a grand prize winner and five friends a Disney World video vacation, a tour of four theme parks along with digital cameras and a video camera.
To encourage the retailer participation crucial for such promotions, Kellogg will offer a $4,000 grand prize and a $2,000 first prize to the retailers that put up the best Disney displays.
In addition to TV, newspaper inserts will run in January and February supporting the promotion, and a promotional site within kelloggs.com will offer a chance to order mini-beans with a code found inside cereal boxes.
Disney World also will tout the promotion inside its parks from January through March.
A Kellogg spokeswoman, who confirmed the company was indeed tying in with Disney, said the company will run advertising to support the promotion but declined further details.
Kellogg's annual dollar sales for ready-to-eat cereal dropped 3.8% to $2.3 billion for the 52 weeks ended Sept. 10, while General Mills' sales grew 2.2% to $2.5 billion, according to IRI.