The decision comes after more than a decade of marketing Squeezit, which had sales of $45 million last year, down from better times in 1994 when it saw sales of $75 million. Now, faced with the impending launch of well-supported new lines from kids' beverage strongholds Coca-Cola Co. and leader Kraft Foods, General Mills is opting out of the category.
Though innovation has led General Mills to the top position in cereal and yogurt-with great success for its squeezable kid-targeted Yoplait Go-Gurt-innovating for a standalone beverage brand up against category giants seemed futile.
General Mills spokesman Tom Forsythe said Squeezit lacked the growth and "strategic fit" within a snack division focused on grains and fruit snacks. Even with net earnings up 34% to $146 million for the fiscal year ended in May, General Mills was unwilling to continue carrying the fading line.
In essence, it was squeezed out. Although the company innovated with the plastic "fun bottles" that became a hallmark of the product, it was left behind as the kid-targeted juice drink category shifted toward pouches and boxes, known as aseptic packaging, that have become lunchbox staples. Kraft pioneered the pouch segment in 1991 when it launched nationwide a small regional brand it had acquired called Capri Sun, and in recent years has brought its Tang brand to the category. Coke's Minute Maid Co., meanwhile, has leveraged its Hi-C and Minute Maid brands to rival Kraft's nearly $500 million franchise and is just now readying the $18 million launch of a line of Disney-themed products it hopes will catapult it to top dog. (See related story, P. 39.)
Such plans likely gave General Mills pause. Although it has earnestly endeavored with trade promotions and minor innovation (like color-changing tablets) for Squeezit, the brand is hardly a match for the high voltage partnership of Coke and Disney, suggested Tom Vierhile, general manager for new product tracking firm Marketing Intelligence. "General Mills has a very good track record in terms of introducing new products, but with the [new] Minute Maid brand, they probably looked to the future and thought, `you've got to have critical mass in this category to survive,"' Mr. Vierhile said.
It was also outgunned in advertising spending. Although General Mills put an estimated $3 million toward a TV commercial from Saatchi & Saatchi, New York to tout its color-changing innovation back in 1996, it spent less than $4 million in media over the last five years, according to Taylor Nelson Sofres' CMR. Instead, most of its efforts focused on in-store promotions to make Squeezit stand out on a shelf dominated by products from larger rivals.
One of the largest is Philip Morris Cos.' Kraft, which drowned out Squeezit with $40 million in measured media last year for its drink portfolio including Capri Sun, Tang and Kool-Aid brands, according to CMR. Kraft is now gearing up for its first national advertising from WPP Group's Ogilvy & Mather, New York, for its new Capri Sun Big Pouch to break in August touting the larger 11.25 oz. pouch as the beverage to satisfy teen thirst. Kraft also continues to wage trade and consumer promotions against its Kool-Aid Bursts, also packaged in "fun bottles." Sales for Kool-Aid Bursts dropped 3.3% to $61 million for the 52 weeks ended June 17, Information Resources Inc. figures show.
As for its plans to rival Minute Maid's new Disney initiative, Kraft's senior category business director Bob Levi said, "We look to lead rather than react." Kraft has a 61% share in the $737 million aseptic juice drink category vs. Minute Maid's 31% share. Minute Maid spent $39 million in measured media to promote its Minute Maid and Hi-C brands in 2000.
Despite the disappointing performance of Squeezit, General Mills plans to forge ahead with innovative new products in its strongholds of convenient cereal and snacks. Launches planned for first-quarter 2002 include Chex Morning Mix, single-serve pouches of Chex cereal, fruits and nuts, as well as Nature Valley Trail Mix Bars and fruit snack Berry Lemonade Gushers.
So can General Mills really be blamed for opting out? Prudential Securities analyst John McMillin ventured the company "has enough on its plate with the pending acquisition of Pillsbury" without having to worry about beverages, a category in which it didn't have a strong base.
"It's really a two-horse race in kids' beverages," said Rick Zuroweste, director of innovation at Minute Maid.