General Mills Bolsters Advertising Budget to Tackle Private Label Challenges

General Mills' notable global brand is Häagen-Dazs.

During the previous quarter, General Mills, the American consumer goods company that holds ownership of popular brands like Häagen-Dazs, Old El Paso, and Cheerios, saw a substantial increase in its media expenditure, with growth projected to persist in the upcoming year.

The business previously announced its intention to increase its investment in brand building campaigns to maintain the relevance of its brands. In its first quarter results for the fiscal year 2024, the business experienced a 4% global sales growth, reaching $4.9bn (£3.95m). The European markets performed exceptionally well with a 10% growth. However, the operating profits for the quarter declined by 14% to $930m (£750m), primarily due to higher administrative and selling expenses.

The business is reaffirming its dedication to brand-building in order to regain profitability. "Putting brand support behind quality ideas is crucial," stated Cofi Bruce, General Mills' CFO, during an investor call today (September 20th). Furthermore, with the stabilization of the environment, this initiative becomes even more important," he emphasized. According to CEO Jeff Harmening, this environment is characterized by moderate inflation, stable supply chains, and a resilient yet increasingly cautious consumer.

Private label headwinds

Supply chain challenges have plagued FMCG companies in the past 18 months, including issues stemming from the Ukrainian conflict, environmental concerns, and staffing complications. Despite these hurdles, General Mills has managed to improve the availability of its products on store shelves compared to last year. Jon Nudi, the company's Group President for North America retail, noted that this year's key difference lies in the increased presence of private label competitors on those shelves.

The pets division experienced stagnant Q1 sales growth, but managed to achieve a 10% increase in profits, with earnings rising from $111.2m (£89.7m) to $123.1m (£99.3m).

General Mills aims to boost growth in its pets business through a revamped advertising strategy, according to Harmening. The company is also reevaluating its pricing and packaging methods, including the introduction of medium-sized dry pet food packages instead of relying heavily on larger sizes. Additionally, General Mills will remain committed to its long-term profit-driving plan, known as the 'accelerate strategy', in order to demonstrate its worth to investors. Harmening expressed confidence in the company's plans and its ability to navigate the evolving consumer landscape, reiterating their guidance for fiscal 2024.