New Products Lift General Mills’ Q1 Sales

General Mills today (Wednesday) reported big gains in its first quarter 2010 fiscal year earnings. The packaged goods maker attributed the growth to new product activity and an uptick in advertising spending.

The company, which makes Betty Crocker cake mixes and Totino’s microwaveable pizza snacks, said net income in the first quarter jumped 51 percent to $421 million, up from $270 million for the same period last year. U.S. retail sales, in particular, grew 6 percent, with net sales for its Big G cereals—a segment that’s performed well over consecutive quarters—up 9 percent.

In addition to boosting measured media spending 16 percent in the first quarter, General Mills said it expects a double-digit increase in marketing spend for its U.S. retail business in 2010.

Recent product introductions, such as Nature Valley Granola Nut Clusters and the Betty Crocker line of gluten-free baking mixes were strong performers, General Mills said. First quarter volume on Yoplait Delights—a 100-calorie per serving, two-layer yogurt product General Mills introduced in July—“exceeded expectations,” Ian Friendly, evp and COO of U.S. retail, said during the earnings call.

The quarter’s solid gains were due to the fact that many of General Mills’ brands operate in “vantage [categories],” Friendly said. In measured channels, sales of General Mills’ products—in categories where the company competes—grew “two times faster than [the] food and beverage categories total,” for the last 52 weeks, he said. Soup, yogurt and cereals make up General Mill’s core portfolio.

With consumers eating at home more, General Mills has also been advertising many of its key brands, including Pillsbury (“Home is Calling” campaign, via Saatchi & Saatchi) and Progresso soups.

“Consumers increased their cereal consumption by almost a billion servings in 2008,” Friendly said of the impact of the eat-at-home trend.

Recent General Mills introductions include four new fiber-rich soups, a low-calorie Yoplus Light probiotic yogurt line, and gluten-free Chex cereals. Of its major U.S. brands, Pillsbury was the fastest growing, with net sales up 12 percent this quarter, per the company. Meals and baking snacks recorded a 4 and 3 percent retail net sales increase, respectively.

Greater involvement in social media has allowed General Mills to reach consumers in more ways. Betty Crocker, for example, has been connecting with consumers via mobile coupons and Facebook, Friendly said. And the company’s longstanding education program, “Box Tops for Education,” has been utilizing blogs and YouTube videos.