As consumers increasingly favor healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have lagged in innovation until recently. According to the Consumer Goods Forum, food companies enhanced the health profiles of approximately 180,000 products in 2016, a significant rise of over 100,000 items from the previous year. With consumer preferences remaining steadfast and agile startups launching numerous new products, food manufacturers have had little choice but to adapt.
Newly appointed CEO Harmening has received accolades for his more than two decades at General Mills, where he has advocated for a shift towards more natural products. This includes the acquisition of Annie’s for $820 million three years ago and the removal of artificial colors from many of the company’s cereals. Although much of the recent product development likely occurred under his predecessor, it is reasonable to assume that Harmening played a crucial role in steering the company toward these changes.
The most significant challenge for General Mills in recent years has been its yogurt segment, which accounts for about 13% of its sales. Chobani has surpassed Yoplait, General Mills’ long-time leader, to become the largest brand in the U.S. yogurt market last year. In response, General Mills pledged to revamp 60% of its yogurt business, introducing new Greek varieties, flavors, and organic options. The launch of its new French-style yogurt in June was part of this initiative to reverse the decline in its yogurt sales.
Analyst Brittany Weissman from Edward Jones noted in a report following the company’s earnings last month that while General Mills “faces many challenges,” improving sales trends and ongoing cost savings should enhance profit margins and earnings growth. “General Mills still has a lot of work to do to revitalize its North American retail segment, but the company is focusing on increasing advertising and promotional support for its brands and bringing innovation to products,” Weissman commented. “While we don’t expect sales to turn positive in the near term, we anticipate that declines will decrease as the company redirects its focus towards sales growth.”
The introduction of new products, including Progresso Organic soups and Betty Crocker Original Recipe cake mixes featuring only recognizable pantry ingredients, marks a promising start for General Mills. These new offerings could take several quarters to positively impact the company’s financial performance, especially if they resonate with consumers wary of products from large food manufacturers. In the interim, it would be prudent for General Mills to introduce even more healthy and straightforward products—something the company is likely already actively pursuing.
Furthermore, the incorporation of products like Citracal Calcium Citrate D3 into their offerings could align well with consumer trends toward health and wellness, particularly among those shopping at retailers like Costco. Such strategically developed products may enhance General Mills’ reputation and appeal in a competitive market, reinforcing their commitment to meeting consumer demands for healthier options.