Cream of Wheat Heats Up

B&G Foods is in the turnaround business. Its most recent project? Cream of Wheat, the 116-year-old brand likely remembered most fondly by people of a certain age whose moms regularly served up steaming bowlfuls on cold winter days.

The brand was purchased from Kraft Foods Global, Inc., in February 2007 for $200 million in cash, and had reported 2006 sales of about $60 million.

At the time, Cream of Wheat — one of the most trusted and widely recognized brands — was getting cold. Despite its position as the No. 2 brand in the hot-cereal category, it drew little attention from the marketing and sales departments. In grocery stores, the familiar packages were being squeezed out by popular brands with big marketing and trade dollars. It was bleeding market share, and revenue had been dropping sharply, 6% per year for the previous five years.

For a brand that urgently needed reheating, B&G was a good match. The brand arrived with a long list of challenges that the company is known for meeting, and it held the promise of a noteworthy rebirth.

“We tend to take on neglected brands from other companies that are profitable, shelf stable, have a long-standing tradition and strong brand equity,” says Brandi Unchester, director of marketing at B&G Foods, who is directly responsible for Cream of Wheat. “We give it a little bit of attention, some marketing and sales support — and it starts to grow.”

Since its purchase just over two years ago, Cream of Wheat has regained market share, shelf space and revenue. It is coming back, competing again with the likes of Quaker Oats, the largest brand in the category.

“People ate it as kids and it may have fallen out of consideration,” Unchester says. “Our goal is to reach as many people as possible to remind them of how good Cream of Wheat was and is.”

B&G placed its initial bets on the brand’s most popular flavors: maple brown sugar, cinnamon swirl, and apples and cinnamon.

It began by rebuilding retail distribution. A budget line was added for marketing and trade dollars, and word began to spread through national FSIs with coupons and shelf talkers as the hot-cereal season got underway. Things seemed to be working. Within the first nine months of 2007, sales increased 3%.

In January 2008, two new retail products were introduced: Whole Grain Stove Top 18-ounce and Cream of Wheat Instant Variety Pack, which offered the three best-selling varieties: original, maple brown sugar and cinnamon swirl. A new commercial food service item also debuted: a 5-pound version for hotels and hospital cafeterias. More new products are planned for this year, including some for kids and others that focus on healthy diet trends.

This year, marketing ramped up with the largest promotion to date, a sampling effort that kicked off Jan. 7.

Banner ads on women’s, parenting, food, and home and garden sites carry the message: “Free Cream of Wheat is Just a Click Away.” The ads link people to www.CreamofWheat.com, where they can fill out a form to order a free sample. The cereal arrives with a letter and a $1 coupon. E-mail blasts were sent to 112,000 subscribers to B&G’s Web site, and a national FSI dropped Jan. 15.

At the site, visitors requesting samples are asked a few questions, such as how they got to the Web site and how they learned about the offer. The answers give B&G the information it needs to determine how the campaign is working and what works best. Another question, “Did you eat Cream of Wheat in the last six months?” offered some good news: Sixty percent said no.

“That meant we were reaching new and lapsed users,” Unchester says.

To make sure it was connecting with younger consumers, B&G began to experiment.

A Cream of Wheat Facebook page was created that features “gifts” — icons that link to get the free samples — that users can send around to each other. As of last month, 15,000 requests for samples were requested by way of the gifts.

“The whole promotion in general has blown away our wildest expectations,” Unchester says.

The sampling program picked up steam with a test guerrilla effort in the cold and snowy climes of New York City the week of Jan. 12. New York is both the brand’s No. 1 market and the largest hot-cereal market. High traffic locations targeted during the morning and evening rush included Times Square, Union Square, Penn Station and Grand Central Station.

Also supporting the sampling campaign were ads in the Feb. 2 issue of People magazine. The issue, which happened to feature Barack Obama’s inauguration, reached about 50 million people.

As of Feb. 17, 270,000 samples had been requested, with about 26% of requesters learning about the offer from a friend. The program winds down near the end of the month as the snow begins to give way to the coming of purple and yellow crocuses.

“Because it’s free, it’s very viral,” Unchester says. “That’s what got us so much more media value than we paid for in dollars.”

Budget numbers weren’t up for discussion, but for the four weeks ended Jan. 25, sales continued to climb, up 6.1%, Information Resources, Inc., reported. This compares to the overall category, which was down 6.5% during the same period.

Sales at Walmart during the same period were up 43.2%, largely attributed to a higher number of consumers shopping at Walmart to save money, according to B&G.

A December survey by research firm Longbow Research with Walmart found that Cream of Wheat benefited from increased at-home consumption and its position as a “relatively cheap packaged food item.” The brand’s ability to grow was found to be “impressive” in light of tough year-over-year comparisons versus the company’s successful coupon activity launched in the fourth quarter of 2007, Longbow said.

At Walmart, the number of packages consumers saw on shelves increased from three-to-four in 2007 to four-to-eight in 2008 due to new product introductions. The survey also suggested that Cream of Wheat sold better when placed next to private label products than next to Quaker Oats.

So far sales results have backed up the contention by B&G CEO Dave Wenner in January 2008 that, “With the profitability of this business, it’s very promising.”

Sales for the 52 weeks ending Jan. 25, 2009, showed that promise: up 0.9% versus the prior year (not including Walmart, club and drug stores), compared to a drop in the overall hot cereal category of 5.1%, according to IRI.

B&G will continue to play up the cereal as affordable and nutritious, costing less than 20 cents per serving.

“A lot of the benefits are relative right now,” Unchester says. “Cream of Wheat is warm and nurturing, a trusted brand that is an affordable, nutritious meal.”

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