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- Food companies including Kraft Heinz, Kellogg, and General Mills are supercharging their marketing spending in order to keep consumers who are buying more packaged foods coming back.
- Many are investing in promoting new products and content like pandemic-tailored recipes to entice customers that have fueled higher sales during the outbreak.
- Overall, the pandemic has been a boon for big food companies, some of which were having trouble selling their shelf-stable and processed products to consumers prior.
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The pandemic has been a boon for food companies like Kraft Heinz, Kellogg, and General Mills. Demand, in fact, has even turned around sales of hot dogs, sugary cereal, and other items that were losing favor with consumers before the COVID-19 outbreak.
Now, each company is increasing or reallocating marketing budgets with one goal in mind: to keep consumers buying more of those products, even after the pandemic recedes.
Americans in 2020 are buying more of their food at grocery stores and cooking it at home, causing sales of companies that make shelf-stable and processed foods to grow, in some cases at the fastest rate in several years. The trend also marks a sharp change from when Kraft Heinz wrote down the value of brands like Oscar Mayer in 2018 and other companies looked to divest processed products in favor of fresh food brands or items that were more on-trend with consumers.
“Some of these gains have the potential to be sticky,” Edward Jones analyst John Boylan told Business Insider, regarding the demand for processed foods.
Read more: Mondelez’s online sales have soared 78%. Its CMO lays out how it’s trying to cash in with direct-to-consumer efforts like a site where people can design their own Oreos
While many companies are spending more on conventional advertising methods, Boylan said that efforts to appeal to consumers digitally, such as securing higher placements for products in online shopping search results, are a key area of focus. “We don’t think that consumers will scroll down several pages to get that perfect artisan mac n’ cheese,” he said.
Kraft Heinz, which was in the midst of a broader turnaround as the pandemic hit this spring, is raising its marketing spend by 40% in the second half of 2020 compared to the same period in 2019. The goal, CEO Miguel Patricio told analysts during an earnings call in October, is “to build our base of loyal customers and keep this momentum going.” This includes increasing the number of repeat purchases of Kraft Heinz products that customers make, he said.
Kraft Heinz is “spending more of our media dollars through e-commerce,” US Zone President Carlos Abrams-Rivera told Business Insider in an interview after the company’s earnings report. The company is also streamlining its messaging around key brands like Heinz ketchup. “That’s something we haven’t done as well in the past,” he added.
Meanwhile, General Mills, which makes products including Progresso canned soup and Hamburger Helper, has also invested more in marketing since the start of the pandemic, “with a significant shift to where consumers are increasingly spending their time, including digital marketing and e-commerce,” CEO Jeffrey Harmening said during the company’s September earnings call.
The CPG company is creating recipes tailored to the pandemic, as well as offering cooking tips and other content for websites devoted to its brands, such as Betty Crocker and Pillsbury. Traffic on the websites has been up in recent months, the company said.
Kellogg, which makes breakfast cereals including Fruit Loops and Special K, plans to increase marketing budgets only modestly for 2020, CEO Steven Cahillane said during an earnings call last month. The company held off on many marketing initiatives during the first half of the year as COVID-19 made it harder to reach consumers. Now, it’s looking to spend the money it saved in the first six months, he said.
Besides investing in its most established brands, Kellogg is also devoting marketing efforts to new products, such as the Incogmeato line of plant-based meats that it sells under its Morningstar Farms label.
“Now is the time to communicate with consumers who discovered our foods during the pandemic,” Cahillane said. “Now is the time to emphasize new messaging around certain brands,” including new ones like Incogmeato.
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