US Food Giants Boost Marketing Spend to Counter Earnings Slide

01 February 2008

NEW YORK: Despite the chill of incipient recession and a slide in net income due to increases in the price of raw materials, US fmcg giants Kraft Foods and The Kellogg Company separately told analysts this week they plan to hike their respective advertising budgets.

Kellogg ceo David MacKay told the moneymen in a conference call that the firm's fourth-quarter loss (net income down 3% ) had been countered by an increase in ad spending to $1.1 billion (€744.14m; £553.32m), equivalent to around 9% of annual sales.

And when non-measured media activities, such as point-of-sale promotions, is included, Kellogg spent around 12% of its $11.8 billion annual sales total on marketing support. 

  • A similar situation pertained at Kraft Foods, where fourth-quarter income declined 6%, spurring ceo Irene Rosenfeld to pledge an increase marketing spend to between 8% and 9% of total sales by 2009.

    Last year Kraft spent $2.6 billion on marketing, in the region of 7% of total sales.

    Says Rosenfeld: "Our pricing realization was not as strong as we would like it to be, because we don't yet have suitable brand equity.

    "But the key to our future in cheese as it is in so many of our businesses is continuing to ensure that we have invested appropriately in quality, in marketing support and in innovation to be able to realize those price opportunities."
  • Data sourced from; additional content by WARC staff