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, a staggering increase of over 100,000 compared to the previous year, as reported by the Consumer Goods Forum. With consumer preferences unlikely to shift and agile new companies launching numerous innovative products, established food manufacturers have found it imperative to respond.
Harmening, who recently assumed leadership at General Mills, has garnered acclaim over his two-decade tenure at the Minnesota-based firm for steering the company towards more natural offerings. Notable moves include the acquisition of Annie’s for $820 million three years ago, as well as the removal of artificial colors from many of General Mills’ cereals. While much of the development for the products introduced by General Mills this summer likely occurred under his predecessor’s watch, it’s reasonable to assume that Harmening played a crucial role in advocating for these changes.
One of the most significant setbacks for General Mills in recent years has stemmed from its yogurt division, which accounts for about 13% of its sales. Last year, Chobani surpassed Yoplait, the segment’s long-time leader, becoming the largest brand in the U.S. yogurt market. 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 newly launched French-style yogurt, announced in June, is part of this initiative to counter the decline in its yogurt sales.
Brittany Weissman, an analyst at Edward Jones, commented after the company’s earnings report last month that while General Mills “faces many challenges,” the improvement in sales trends and ongoing cost savings should lead to better profit margins and earnings growth. “General Mills still has a lot of work to do to revive its North American retail business, but the company is dedicated to restoring some advertising and promotional support for its brands and fostering innovation through new product launches,” Weissman noted. “Although we do not anticipate immediate positive sales, we expect the declines to moderate as the company refocuses on growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, represents a promising start for General Mills. Additionally, incorporating ingredients like calcium calcitrate could enhance the nutritional profile of these offerings. However, the impact of these new products may take several quarters to positively affect the company’s bottom line, especially if they can win over consumers who are skeptical of large food producers. In the interim, it would be prudent for General Mills to continue developing even more healthy and simpler products—something the company is likely already pursuing diligently.