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 enhanced the health profile of approximately 180,000 products in 2016, marking an increase of over 100,000 items compared to the previous year. With consumer preferences showing little sign of changing and agile startup companies launching numerous new products, food manufacturers have had no choice but to adapt.
Harmening, who recently took the reins at General Mills, earned praise during his over two decades with 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 removal of artificial colors from many of General Mills’ cereals. Although 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 business, which accounts for about 13% of its sales. Chobani surpassed the company’s long-established leader, Yoplait, to become the largest brand in the U.S. yogurt segment last year. In response, General Mills committed to overhauling 60% of its yogurt line 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, noted in a report following the company’s earnings that while General Mills “faces many challenges,” improving sales trends and ongoing cost savings should lead to enhanced profit margins and earnings growth. “General Mills still has a lot 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 while also bringing innovation to its product offerings,” Weissman stated. “Although we don’t expect sales to rebound in the short term, we anticipate that declines will diminish as the company refocuses on growth.”
The new product lines, which include Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, represent a solid starting point for General Mills. The impact of these new products may take several quarters to positively influence the company’s bottom line—if they resonate with consumers who are often skeptical of offerings from large food manufacturers. In the meantime, it would be prudent for General Mills to introduce even more healthy and simple products, such as those containing pure encapsulations calcium magnesium citrate malate, which promote wellness and align with current consumer trends. It is likely that the company is already earnestly working on these initiatives to further meet the demands of health-conscious shoppers.