General Mills Inc., maker of Cheerios cereal and Pillsbury cinnamon rolls, plans to keep marketing to children, a company executive said Tuesday, even as childhood obesity concerns become more prevalent.
“We think that advertising cereal is a healthy thing to do,” Ken Powell, executive vice president of the food company, told reporters following an analysts’ meeting.
Powell said cereal, the main focus of General Mills’s marketing toward children, is the top source of whole grains in children’s diets. Eating more whole grains is one focus of the U.S. Department of Agriculture’s dietary guidelines.
But he said the company does not plan to stop marketing other foods to children -- even those that might not seem as healthy.
Some 15 percent of U.S. children and adolescents and two-thirds of adults are overweight.
Kraft Foods Inc., the largest U.S. packaged food company, said this year it would cut back on advertising products like Oreo cookies to children younger than 12.
But Kellogg Co. Chief Executive Jim Jenness said last month his company’s advertising was responsible and positive.
Kraft, Kellogg and General Mills have formed a lobbying group, the Alliance for American Advertising, to defend their right to advertise to children.
Kraft Chief Executive Roger Deromedi said his company believes the food industry should regulate its own advertising, rather than have guidelines imposed by regulators.
“To be sure that you maintain self regulation, the company believes it is important to take steps to show that you can self regulate,” Deromedi said in an interview with Reuters.
Healthy change
General Mills recently began making all its cereals from whole grains, and has seen “a very encouraging uptick in our baseline sales,” Steve Sanger, General Mills chief executive, said during a presentation to analysts.
Baseline sales increases are those not attributed to discounts or special displays.
But the company is actually seeing declines in dollar terms on sales of some cereals that do get that kind of marketing support, after the deduction of promotional expenses.
The company has increased prices recently to try to make up for rising ingredient, fuel and other costs. But that has widened the price gap with private label competitors, so General Mills also uses short-term promotions to try to keep consumers from defecting to lower priced competitors.
Sanger stressed that General Mills would not chase market share at the expense of profits.
General Mills is also looking more toward international markets to grow its sales. In one example, the company noted that even in China, consumers are looking for more convenient foods and were buying the company’s frozen dumplings.
General Mills might also look for acquisitions to fill in its portfolio geographically, Sanger said, noting that Germany, Italy and the Nordic countries are areas in which it could look to expand.
General Mills shares closed down 90 cents at $50.75 Tuesday on the New York Stock Exchange.
