General Mills fortified its marketing with a 17% jump in spending and watched revenues rise 14% in its latest quarter, as more consumers ate at home.
The marketing increase, outlined in a presentation to analysts today, comes after the company raised its ad spending by 22% for the first six months of this year, versus the same period in 2007, per Nielsen Monitor-Plus (which does not measure online outlays).
The news wasn’t all good. For the fiscal first quarter ended Aug. 24, General Mills’ net income fell 3.6% to $278.5 million due to higher commodity costs, and much of the revenue boost came from price increases.
But the company pointed to a number of success stories in the quarter that were at least in part driven by the fact that consumers are eating out less and at home more.
For instance, net sales for the baking products unit grew 25% on strong sales of Betty Crocker dessert mixes and Gold Medal flour. Yoplait’s sales were up 19% and the snacks division rose 14% on strong sales of Nature Valley and Fiber One snack products. Cereal and soup sales also grew by 10%.
Since the loss was less than expected, analysts cheered the announcement, sending the company’s stock price up about 2% at press time.
In a research note to clients, David Palmer of UBS speculated that more consumers would be eating breakfast at home, further bolstering General Mills’ cereal business. “We believe the shift of U.S. dinner occasions back to home will continue over the next few quarters,” Palmer wrote. “As job losses deepen, we wonder if lunch and breakfast occasions could be next