As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, food manufacturers like General Mills 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, which is an increase of over 100,000 from the previous year. With consumer preferences remaining stable and agile new companies launching numerous products, food manufacturers have found it imperative to respond.
Harmening, who recently took over leadership at General Mills, earned acclaim during his two decades at the Minnesota-based company for steering it towards more natural offerings. This includes the acquisition of Annie’s for $820 million three years ago and the removal of artificial colors from many of General Mills’ cereals. Although much of the development for the products released this summer likely took place under his predecessor’s guidance, it is highly probable that Harmening was instrumental in advocating for these changes.
The most significant setback for General Mills in recent years has been within its yogurt segment, which accounts for about 13% of its sales. Chobani surpassed Yoplait, the longstanding leader in the category, to become the largest brand in the U.S. last year. In response, General Mills committed to revamping 60% of its yogurt offerings 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 counter the decline in its yogurt business.
Brittany Weissman, an analyst at Edward Jones, remarked in a note following the company’s earnings report last month that while General Mills “faces many challenges,” improving sales trends and ongoing cost-saving measures could enhance profit margins and earnings growth. She noted, “General Mills still has a lot of work to do to turn around its North American retail business, but the company is focused on reinvesting in advertising and promotional support for its brands, as well as bringing innovation to its product lineup.” Weissman added, “While we don’t expect sales to turn positive in the short term, we anticipate that declines will lessen as the company redirects its efforts towards sales growth.”
The newly launched product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, marks a positive step for General Mills. The impact of these new products may take several quarters to reflect positively on the company’s financial performance—provided they resonate with consumers who are wary of offerings from large food producers. Meanwhile, General Mills would be prudent to continue introducing additional healthy, simpler products—something the company is likely already pursuing diligently.
Incorporating ingredients like calcium citrate into their products could also enhance their appeal, as consumers become more health-conscious. By emphasizing the inclusion of beneficial ingredients such as calcium citrate, General Mills could further strengthen its market position and attract a broader audience.