Foodmakers may be worried about higher costs for key ingredients, pushing through price increases and still maintaining their profits. But for big names like Sara Lee, Kraft and others, these slim times don't mean doing away with their advertising budgets.
While the food companies, like other large advertisers, pulled back on their spending as the economy soured, many big foodmakers plan advertising punches in the coming months. The shift comes as consumers worried about rising costs eat at home more and shop with budgets in mind — a trend that's leading many of them to generics, or private-label brands.
So while automakers may be less apt to advertise right now — SUV, anyone? — food companies say they are jumping back in the game. If they want to keep selling their own brands, they've got to keep them in the minds of shoppers.
From Sara Lee Corp.'s new ad campaign with The Walt Disney Co.'s "High School Musical 3: Senior Year" to Kraft's new pizza commercials preaching "DiGiornonomics," consumers should expect to be blitzed by food advertisements in the next year.
Many major food makers are promising boosts to their advertising in the new fiscal year or reporting their spending is up in the most recent one. Their ads seem to be hitting a variety of outlets, including print, television, in-store promotion and the Internet — which marketers say helps them hone in on consumers and get the most bang for their advertising buck.
Analysts say it makes sense, even as these companies grapple with high prices for oil, corn and grains.
Consumers aren't going to change what they eat as they pull away from restaurants, said Harry Balzer, vice president of consumer research firm the NPD Group, and an expert on American eating patterns. They're just going to look for bargains, and that can mean changing brands.
"It's very hard for us to change our behavior. If we like ice cream, we're going to continue eating ice cream," he said. "Now the question is going to be what brand you're going to buy."
That means more pressure on food companies to keep brand recognition strong at a time when consumers are swallowing price increases and finding some of their favorite products shrunken — a move some companies are making as a way to help absorb the higher input costs.
Sue Mentecki, 51, of Milwaukee, said she's looking at more generics lately as she tries to keep up with rising costs. Her family of four's food budget is now up $30 a week, to between $120 and $150. She goes through two boxes of cereal a week, up from one-and-a-half because the sizes are shrinking, so generics are increasingly attractive, she said.
"You have to buy more," she said while shopping at a Target recently. "It stinks."
The ads hitting the market are focusing on quality and in some cases price points — two ways to give value to brands. Kraft Foods Inc., the Northfield, Ill.-based maker of Oreo cookies and Oscar Mayer hot dogs, is playing up the affordability of its DiGiorno pizza in a new television ad campaign.
The "DiGiornonomics" message to customers is all about the bottom line. Two pizzas, full of toppings, sit side by side as an odometer ticks away until it reaches their prices. The DiGiorno pizza costs $6.69, while the delivery one is $16.13.
"One of these pizzas won't leave your wallet on empty," a narrator says, hinting at the painfully high gas prices that are one of the reasons consumers are watching their costs.
Rick Searer, Kraft's executive vice president and president of the company's North America division, said the company has been boosting the quality of its products, such as putting Arabica beans in Maxwell House coffee and making improvements to its salad dressings. But so far it hadn't played up the affordability of its products, he said, and now seems the time to do that.
"We are really attempting to course correct a little bit on some of our brands, not to undermine what we're doing in investing or to shy away from it," he said. "But on specific brands where we have a value proposition that resonates with consumers, we're communicating that."
The company plans other boosts in advertising this year, and is expected to top the $1.55 billion it spent on advertising and marketing last year. The stakes are big with DiGiorno, which is the market leader in the store-bought pizza segment with a 20 percent share.
Playing up price comparisons keeps brands in the minds of consumers, said Frank Luby, a partner with Simon-Kucher & Partners, a strategy and marketing consulting firm that focuses on pricing.
Companies that raise prices — Kraft's were up an average of 7 percent in the most recent quarter — risk losing consumers, he said, so ads touting bargains make sense.
"If you're stressing value you're reminding people as they start making these price-value determinations, perception-wise that these brands still have something going for them," he said.
Heinz, Hormel and Sara Lee are also boosting their ad budgets this year.
H.J. Heinz Co., the Pittsburgh-based maker of Heinz Ketchup, Weight Watchers Smart Ones products and Ore-Ida potatoes, recently said it hopes to increase consumer marketing by 8 percent to 12 percent in its new fiscal year as part of a two-year growth plan.
Hormel Foods Corp. is likewise planning a boost and is expanding the number of brands it advertises, including a campaign around Dinty Moore stews, said Jeffrey M. Ettinger, president and chief executive. The Austin, Minn.-based company, also known for Spam, is running print ads for Dinty Moore drawing on themes of men and outdoor activities. The brand saw sales up at least 20 percent in the most recent quarter.
Starting in September, a multimillion dollar campaign will link Sara Lee's Soft & Smooth bread — which has sales of more than $200 million a year — with Disney's popular "High School Musical" enterprise, said Tim Zimmer, vice president of Sara Lee Fresh Bakery.
TV spots will feature characters such as Chad Danforth, played by Corbin Bleu, and Taylor McKessie, played by Monique Coleman. The campaign includes a sweepstakes to win a screening of the new "High School Musical" movie with Bleu, and promotions on 40 million bread packages and in 15,000 in-store displays. An Internet component allows people to look up the characters' "favorite recipes" such as Taylor's "Sweet as Honey" peanut butter sandwich.
This is an example of more pointed marketing, said Domenick Celentano, an adjunct business professor at Fairleigh Dickinson University in Madison, N.J. That kind of approach is more useful now that consumers are becoming more segmented and shopping for different brands in different stores — especially with bargains in mind, he said.
Companies are increasingly going online and targeting individuals such as "High School Musical" fans, he said.
"Mass marketing is sort of dead and really what companies are looking at very heavily is using the Internet to get to the narrower-focused consumer," he said.