General Mills upbeat about US ready-to-eat cereal sales

Kendall Powell, chairman and chief executive officer of the Minneapolis-based company, speaking to analysts at this week’s Barclays Back-To-School​ consumer conference that market share for its Big G cereal brands is “holding up pretty well in the first quarter.”​

“We expect Big G to show modest net sales growth in this year’s first quarter despite a tough comparison to 9 per cent net sales growth last year,”​ he said.

The company’s newly released cereal brand, Chocolate Cheerios, is set to deliver first-year sales of $65m to $70m. Meanwhile, its Wheaties Fuel, the first cereal created specifically for men and again launched earlier this year, has also been deemed a success with that consumer base.

“It’s doing well and it’s helping to increase sales for original Wheaties, too,”​ claims Powell, who added that sampling at key events such as NFL games is a key driver of baseline sales for the new product.

Asia-Pacific growth​

Meanwhile, Datamonitor’s Recovery from Recession (RfR) service, which tracks global consumer spending intentions, found that the majority of consumers in Australian and Asian countries will continue to spend on breakfast cereals.

In April 2010 for example, the market researchers note, 68 per cent of Australian consumers reported they would be maintaining their level of expenditure on the breakfast staple – considerably higher than the proportion who said the same about confectionery - 45 per cent.

Again, in China, 56 per cent of consumers said they would keep their breakfast cereal spend at the same levels, while a substantial minority of 11 per cent said they would actually be increasing their expenditure in this category, reflecting the potential of such products in the Asia Pacific region.

The analysts expect the breakfast cereals category to achieve sales worth $2.8b in that region this year, which would represent a year on year growth of 6.3 per cent over 2009.

And Nikhil Aggarwal, senior consumer goods analyst at Datamonitor, notes that increased urbanization, rising levels of disposable incomes, and exposure to Western culture dietary habits are some of the reasons for buoyancy in the category in Asia.

Furthermore, the developing organized retail system, he said, will increase both product visibility and availability, wtih both of these factors set to act as a growth stimulus.

“As urban markets reach high penetration levels, companies are expected to dedicate significant resources into expanding distribution networks to reach large, lucrative, yet untapped rural markets,”​ added the analyst.