General Mills boosts marketing spending, pushes for appropriate messages during COVID-19
General Mills has seen U.S. shoppers scoop up everything from its Honey Nut Cheerios cereal to its Blue Buffalo dog food during the coronavirus outbreak, yet declined to raise its sales forecast for its current fiscal year, knowing the situation can change rapidly.
The Minneapolis-based company has first-hand knowledge of the benefits and pressures the coronavirus outbreak puts on food marketers. In China, sales of its Wanchai Ferry frozen dumplings soared when people had to stay home. But visits to its Häagen-Dazs ice cream shops plummeted 90 percent as about half of the shops were temporarily closed and many diners curbed visits to the ones that remained open.
Now, that type of pressure has descended upon the United States.
“The change of pace on consumer habits and the spread of the virus has been the likes of which we have never seen,” General Mills Chairman and CEO Jeff Harmening said on a conference call.
The maker of Cheerios, Old El Paso taco shells and other foods suited for at-home meals has seen a surge in orders from U.S. retailers and an even bigger surge in people buying its products.
“As people look for things they know in times like these, our brands tend to do fairly well because it offers comfort,” Harmening said.
The company is trying to maintain a sense of normalcy in its marketing.
“As we look around the world, we have made sure that whatever marketing we have that the messaging is appropriate,” Harmening said. “It’s a unique time and we need to make sure, whether we’re talking about our brands on social media or we’re doing it through broadscale like TV, first of all, our messages have to be appropriate for the time.”
The second part, he said, is that ads should not talk about “stocking up” or that kind of messaging.
He also offered what he said was his own opinion, with very little data to back it up.
“I think it also can connote a sense of normalcy for people as their lives are anything but normal in many parts of the world. And so, for us, we think we have a responsibility to do that, whether it’s delivering our products or whether it’s advertising, you know, Cinnamon Toast Crunch.”
Marketing spending was up by a high-teens percentage in the third quarter and should be similar to slightly higher in the fourth quarter, Chief Financial Officer Kofi Bruce said on the call.
General Mills reported results Wednesday for its fiscal third quarter, which ended on Feb. 23, before coronavirus led to massive shutdowns of U.S. schools and restaurant dining rooms. Through the first nine months of the year, for example, its U.S. cereal sales were up 1 percent.
Now, overall U.S. sales for the week ended March 7 were up in a low double-digit percentage range and it expects to see that consumer purchases in the week ending March 14 were many times higher than that. The short-term surge in demand is expected to ebb in the coming months.
The company still expects fiscal 2020 sales to increase 1 percent to 2 percent and said the impact of COVID-19 on its results remains uncertain.
When the Great Recession hit, products such as cereal and canned goods did well as people stocked up. “During that time, people tend to eat in more and General Mills did quite well. But that was a decade ago. We’ll see how it plays out this time,” Harmening said.
General Mills has required all of its employees who can work from home to do so through at least April 1 and restricted business travel and visitors to its facilities. “We are taking steps to flatten the curve and limit exposure to the virus while continuing to safely operate our business,” Harmening said.
Still, the manufacturing plants remain open. There, the company is encouraging social distancing, spreading break times out rather than having large groups congregating in lunchrooms, for example. And it has adjusted its leave policy so that people who are sick can stay home and get paid, Harmening added.
Separately, on Wednesday, Hormel Foods issued its own statement related to COVID-19, saying it has seen strong demand for its products including Spam, Skippy peanut butter and Hormel chili and microwaveable meals. Hormel also said that it is donating $1 million in cash and products for hunger relief and food insecurity.