Cereal sales up as consumers look for cheap meals

Cash-strapped U.S. consumers looking for cheap meals helped push cereal maker General Mills Inc.'s fiscal second-quarter profit 50 per cent higher.

The maker of Cheerios and Yoplait yogurt has posted several strong quarters as ingredient prices dropped and recession-weary consumers eat at home more often to save money.

"Consumers around the world continue to focus on nutritious, convenient food choices that help them make breakfast, lunch and dinner for their families at good value. Demand for our leading brands remains strong," chairman and CEO Ken Powell said in a statement Thursday.

General Mills continued to draw shoppers to its brand-name basics during the quarter, particularly its cereals. Big G cereal revenue climbed 10 per cent, with better sales of Chex cereal varieties, Cheerios and Fibre 1 cereals.

Snacks sales rose six per cent on improved results from Fibre 1 and Nature Valley snack bars as well as several fruit snack varieties. General Mills also posted sales increases in its baking products, Yoplait and Pillsbury units.

The company boosted its ad spending by 37 per cent during the quarter as it tries to keep shoppers aware of its products during difficult economic times. It plans to put more money into advertising during the second half of the year to try to build on its brands' gains, Powell said.

General Mills, based in Minneapolis, reported that its earnings climbed to $565.5 million US, for the quarter that ended Nov. 29. Sales increased two per cent to $4.08 billion, partly on better cereal and snacks sales.