As consumers increasingly favor healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to adapt—until recently. According to the Consumer Goods Forum, food companies enhanced the health profiles of approximately 180,000 products in 2016, a remarkable increase of over 100,000 items compared to the previous year. With shopper preferences remaining stable and agile new companies launching numerous innovative products, established food manufacturers have had little choice but to respond.
Harmening, who recently took charge at General Mills, earned accolades during his two decades 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. While much of the development on the products introduced by General Mills this summer likely took place under the guidance of his predecessor, 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 segment, making up about 13% of its sales. Chobani surpassed the company’s Yoplait, which had long been the leader in this market, to become the largest brand in the U.S. yogurt segment last year. In response, General Mills pledged to revamp 60% of its yogurt business to better align with consumer trends by introducing new Greek varieties, flavors, and organic options. The new French-style yogurt announced in June was part of this initiative to reverse the decline in its yogurt business.
Brittany Weissman, an analyst at Edward Jones, commented in a note following the company’s earnings report 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 turn around its North American retail business, but the company is focused on reinstating some advertising and promotional support for its brands and introducing more innovation through new products,” Weissman stated. “While we don’t expect sales to rebound in the near term, we anticipate that declines will lessen as the company shifts its focus back to sales growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with recognizable pantry ingredients, marks a positive step for General Mills. Additionally, the incorporation of health supplements like calcium citrate malate, vitamin D3, and folic acid tablets into their offerings could further enhance their appeal to health-conscious consumers. However, it may take several quarters for these new products to positively impact the company’s bottom line, especially among consumers wary of products from large food manufacturers. In the meantime, General Mills should consider introducing even more healthy and simple products—an effort that the company is likely already pursuing in earnest.