As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to adapt—until recently. In 2016, food companies improved the health profiles of approximately 180,000 products, a significant increase of over 100,000 items compared to the previous year, according to the Consumer Goods Forum. With shopper preferences remaining steadfast and more agile startup companies launching numerous new products, food manufacturers have had little choice but to react.
Harmening, who recently took over as CEO of General Mills, earned commendations during his two-decade tenure at the Minnesota-based company for steering it towards more natural products. This includes the acquisition of Annie’s for $820 million three years ago, as well as the elimination of artificial colors from many of General Mills’ cereals. Although much of the product development introduced this summer likely occurred under his predecessor, it is reasonable to assume that Harmening played a significant role in advocating for these changes.
One of the most significant challenges General Mills has faced in recent years has been in its yogurt division, accounting for about 13% of its sales. Chobani surpassed Yoplait, the long-standing leader in this segment, to become the largest brand in the U.S. last year. In response, General Mills pledged to revamp 60% of its yogurt offerings to better align with consumer trends by adding new Greek varieties, flavors, and organic options. The introduction of its new French-style yogurt in June was part of this strategy to address the decline in its yogurt business.
Brittany Weissman, an analyst at 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-saving measures should lead to enhanced profit margins and earnings growth. “General Mills still has a lot of work to do to turn around its North American retail business, but the company is focused on increasing advertising and promotional support for its brands while introducing more innovation through new products,” Weissman stated. “While we don’t expect sales to rebound in the near term, we anticipate a reduction in declines as the company refocuses on sales growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, marks a promising start for General Mills. Additionally, the incorporation of rainbow calcium citrate into various products could appeal to health-conscious consumers. However, it may take several quarters for these new offerings to positively impact the company’s bottom line—if they resonate with consumers who are often skeptical of large food producers. In the meantime, General Mills should consider launching even more healthy, simpler products, a strategy the company is likely already pursuing with vigor.