Steady spending, new products keep Gen'l Mills cooking

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General Mills has managed to escape much of the wrath Wall Street has bestowed on food industry companies in recent years, and the reason, by many accounts, is pragmatism.

During periods when competition in the cereal category cut back on marketing spending to boost profits, General Mills has continued to spend steadily on marketing and innovation. That philosophy has been extended to other divisions, the most recent being General Mills' Betty Crocker unit, which is launching two new entries this summer, Bowl Appetit! and Chicken Helper Oven Favorites.

"General Mills has been our top pick in the food sector for quite a while, likely due to their consistency of investment, not the bet-the-farm approach some other companies have taken, and their overall brand portfolio, which has been increasingly geared toward convenience," said Erika Long, an analyst with J.P. Morgan Securities. Ms. Long also points to General Mills' high "hit rate" for the handful of new products it introduces annually, which seem well-targeted to consumer trends.


The stock price of General Mills, a company with $6.2 billion in sales in '99, has appreciated 13% since June 1998, closing June 7 at 401/4. In that same period, stock in the overall food industry group has declined 26%. Kellogg Co. saw its stock fall 29% in that period.

Even Bill Leach, an analyst at DLJ Securities who recently downgraded General Mills in expectation that cereal competitor Kellogg seems finally to be stabilizing, ceded the company has a reputation as more innovative than many of its counterparts.

Among its more successful recent new innovations have been product forms and packaging, with the introduction of Yoplait Go-Gurt yogurt-in-a-tube and a spoon-in-the-lid package for Colombo, both geared toward offering options for busy consumers. The new meal lines, Betty Crocker Bowl Appetit! and Betty Crocker Chicken Helper Oven Favorites, similarly aim to offer consumers the convenience they're seeking.

The first, set to launch June 26, is a line of seven individual shelf stable bowl meals intended as a quick, tasty lunch option, while Betty Crocker Chicken Helper Oven Favorites, also set to debut the end of June, is a line of four meal kits that extend the successful Chicken Helper skillet meals into the growing easy oven meals sector.


Last year, General Mills introduced a line of Betty Crocker pasta and rice side dishes that Bob Waldron, director of marketing for Betty Crocker's main meal-side dish unit, said has met with intense competitive pressure from longtime players Lipton and Quaker Oats Co.

"Time will tell as to the long-term viability of that product," he said.

The new Bowl Appetit! will play more to the convenience trend, offering three rice-based meals, including Herb Chicken Vegetable Rice and four pasta-based meals, including Three Cheese Rotini and Macaroni & Cheese. They are prepared in a microwave after adding water. General Mills hopes to differentiate Bowl Appetit! from other cup meals by touting larger portion sizes and better taste through heavy marketing spending, which has been rare in the category.

The $10.5 million budget for Bowl Appetit! includes 13 weeks of TV advertising from DDB Worldwide, Chicago, beginning in the fall to communicate the message that "Betty Crocker has found a way to make a convenient meal that tastes like you want it to," said Matt Pierre, marketing manager-new product development for Betty Crocker meals.

"Research shows that 30% of working adults are skipping lunch once a week, and stay-at-home moms often choose between lunch and other things they have to do, and we're now offering them the convenience of 5-minute meals and a better eating experience." The ads likely will continue to use the Betty Crocker umbrella theme, "Betty Crocker: What a great idea."


With the new Oven Favorites, General Mills' is looking both to extend the success of its Chicken Helper line, which has grown to $61 million in sales since its relaunch last year, and compete with a growing number of new add-to-meat dinners, including Kraft Foods' Stove Top Oven Classics and Lipton's Sizzle & Stir. The shelf-stable line of chicken-based meals, including Homestyle Stuffing & Gravy and Creamy Chicken & Rice, will receive $10 million in dedicated advertising on top of the ongoing Helper advertising. General Mills spent $19 million on Chicken and Hamburger Helper in 1999, according to Competitive Media Reporting.

TV ads from DDB, running from July through November, also will carry the "What a great idea" theme that "reminds busy moms to turn to Betty Crocker for meals or dessert solutions," Mr. Waldron said.

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