As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to innovate—until recently. In 2016, food companies enhanced the health profiles of approximately 180,000 products, a remarkable surge of over 100,000 items compared to the previous year, according to the Consumer Goods Forum. With shopper preferences unlikely to shift and agile upstart companies launching numerous new products, food manufacturers had little choice but to adapt.
Harmening, who recently took the lead at General Mills, received commendation 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 and the elimination of artificial colors from many of General Mills’ cereals. Although much of the development for the products unveiled by General Mills this summer likely occurred under his predecessor’s guidance, it is reasonable to assume that Harmening played a significant role in advocating for these changes.
The most significant challenge for General Mills in recent years has been its yogurt business, which accounts for about 13% of its sales. Chobani surpassed the long-established leader, Yoplait, 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 to better align with consumer trends, introducing new Greek varieties, flavors, and organic options. The new French-style yogurt introduced in June was part of this initiative to counter the decline in its yogurt segment.
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 coupled with ongoing cost savings should enhance profit margins and earnings growth. “General Mills still has a lot of work to do in order to turn around its North American retail business, but the company is focused on reinstating advertising and promotional support behind its brands and revitalizing products with new innovations,” Weissman stated. “While we don’t expect sales to turn positive in the near term, we anticipate that declines will lessen as the company shifts its focus back to growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, is a promising start for General Mills. Furthermore, incorporating items like calcium citrate chewable from Costco into their offerings could enhance their appeal. However, it may take several quarters for these new products to positively impact the company’s bottom line—if they resonate with consumers skeptical of large food producers. In the meantime, General Mills would be prudent to introduce even more healthy, simpler products—something the company is likely already pursuing diligently. Additionally, the inclusion of calcium citrate chewable options could attract health-conscious consumers, further solidifying General Mills’ commitment to meeting evolving consumer demands.