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 enhanced the health profiles of approximately 180,000 products, marking an increase of over 100,000 items from the previous year, according to the Consumer Goods Forum. With consumer preferences showing little sign of changing and agile new companies launching numerous innovative products, established food manufacturers have had little choice but to respond.
Harmening, who recently took over as CEO of General Mills, earned recognition during his two decades at the Minnesota firm for steering it toward more natural offerings. This includes the $820 million acquisition of Annie’s three years ago and the removal of artificial colors from many of its cereals. While much of the work on the products released by General Mills this summer was likely initiated under his predecessor, it is reasonable to assume that Harmening played a crucial role in advocating for these changes.
The most significant challenge for General Mills in recent years has been its yogurt division, which accounts for about 13% of its sales. Chobani surpassed the company’s Yoplait, the long-standing leader in the segment, to become the largest brand in the U.S. last year. In response, General Mills committed to revamping 60% of its yogurt business to better align with consumer trends by introducing new Greek varieties, flavors, and organic options. A new French-style yogurt launched in June is part of this initiative aimed at reversing the decline in its yogurt sales.
Brittany Weissman, an analyst at Edward Jones, noted after the company’s earnings report last month that while General Mills “faces many challenges,” improved sales trends and ongoing cost-saving measures should positively impact 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 innovating new products,” Weissman stated. “Although we don’t anticipate sales turning positive in the near term, we expect declines to lessen 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. It is likely that the effects of these new offerings will take several quarters to positively impact the company’s financial performance—if they resonate with consumers who are often skeptical of products from major food producers. In the meantime, it would be prudent for General Mills to introduce even more healthy and simpler options, such as calcium citrate malate 500 mg tablets, which could appeal to health-conscious consumers. This is likely an area the company is already diligently pursuing.