Grrreat Numbers

For the better part of this year, Procter & Gamble, Kraft and Kellogg have continued to boost prices to fund larger ad spends. Based on earnings reports from the three today, that’s not changing any time soon.

Kraft, the maker of Singles and DiGiorno pizza, more than doubled its net income from $596 million to $1.4 billion in the third quarter. Net revenue for Kraft’s U.S. beverage business grew 7.4%, stemming from competitive pricing in the coffee, ready-to-drink and powdered beverages categories. Snacks, likewise, performed well, with strong marketing behind brands such as Oreo, Chips Ahoy!, Ritz, and Kraft Macaroni and Cheese crackers; the snacks category grew 1.4%.

Kraft’s gains come following a $747 million U.S. ad spend through August of this year (excluding online), per Nielsen Monitor-Plus. (Kraft spent $1.1 billion on advertising in 2007.) Most recently, the company kicked off a Kraft Singles value messaging campaign in September, with ads promoting the cheese product in a down economy. Kraft introduced the campaign after sales of its signature Singles brand fell 10.87% to $413 million, per IRI.

“As family budgets are squeezed, our ongoing programs to add value to our products through investments in quality, marketing and innovation are paying off,” Kraft’s CEO Irene Rosenfeld said in a statement. “We remain confident that we will deliver our 2008 commitments, with strong momentum going into 2009.”

Food rival Kellogg also upped its marketing dollars following price hikes on breakfast staples such as Eggo waffles and Morningstar Farm burgers and meal starter kits. The Battle Creek, Mich.-based company spent $17 million advertising Eggo Waffles alone, compared to $22 million overall for the Eggo brand (which includes pancakes, syrups and cereal). Kellogg’s third quarter net earnings increased from $305 million to $342 million, a 12% increase from the year-ago period.

In a research note published this morning, Edward Jones food analyst Matt Arnold linked Kellogg’s success to a “disciplined approach” in marketing and developing its brands. Such tactics include a focus on gaining market share through “value-added, innovative products, which tend to carry better profit margins,” such as its healthy snacks and breakfast businesses.

Procter & Gamble, the world’s largest advertiser, meanwhile, saw net income rise from $3.08 billion to $3.35 billion. Beauty (12% increase to $5.1 billion), fabric and home care (10% increase to $6.5 billion), and baby and family care (10% increase to $3.8 billion) posted the biggest gains. The Cincinnati-based maker of Tide and CoverGirl has continued to entice penny-pinching consumers with new product innovations like Dawn Plus Hand Renewal and a rechargeable toothbrush that’s the size of a manual one, dubbed Oral-B Pulsonic.

“This quarter was yet another example of the strength of P&G’s balanced brand and geographic portfolio,” P&G CEO A.G. Lafley said in a statement.

Arnold said packaged food companies tend to do well in a down economy because of their product portfolios. “It’s such a stable product. There is some trade down that can impact their business, but the bottom line is, the demand backdrop is still very good,” Arnold said in an interview with Brandweek. “With that in mind, companies will do what they need to do to keep their brands top of mind in [these economic] conditions.”