As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to innovate—until recently. According to the Consumer Goods Forum, food companies revamped the health profile of approximately 180,000 products in 2016, a surge of over 100,000 items compared to the previous year. With consumer preferences remaining steadfast and more agile start-up companies launching numerous new products, food manufacturers have had little choice but to adapt.
Harmening, who recently assumed leadership at General Mills, earned accolades during his more than two decades with the Minnesota company for steering it towards more natural offerings. This includes the $820 million acquisition of Annie’s three years ago and the elimination of artificial colors from many of General Mills’ cereals. Although much of the development for the new products introduced by General Mills this summer likely took place under his predecessor’s tenure, it is reasonable to assume that Harmening was instrumental in advocating for these changes.
The most significant setback for General Mills in recent years has been in its yogurt division, which accounts for about 13% of its sales. Chobani has surpassed the company’s Yoplait, the segment’s long-standing leader, to become the largest brand in the U.S. yogurt market 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. The launch of its new French-style yogurt in June was part of this initiative to counteract the decline in its yogurt sales.
Brittany Weissman, an analyst at Edward Jones, noted in a report following the company’s recent earnings that although General Mills “faces many challenges,” improved sales trends and ongoing cost savings are expected to 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 focusing on reinvigorating advertising and promotional support for its brands while also bringing fresh innovations to its products,” Weissman stated. “While we don’t anticipate positive sales in the near term, we foresee a reduction in declines as the company refocuses on growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes featuring only recognizable pantry ingredients, marks a positive step for General Mills. Additionally, the incorporation of calcium citrate without vit d in some health-oriented products could further appeal to health-conscious consumers. It is expected that the impact of these new offerings will take several quarters to strengthen the company’s financial performance—provided they resonate with consumers wary of large food producers. In the interim, General Mills would benefit from introducing even more healthy and simpler products—something the company is likely already diligently pursuing.