As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills, along with other food manufacturers, has 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 significant jump of over 100,000 items compared to the previous year. With shopper preferences remaining steadfast and agile startup companies continuously launching new products, food manufacturers have had little choice but to respond.
Harmening, who recently assumed leadership at General Mills, has received accolades during his more than two decades with 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 elimination of artificial colors from many of General Mills’ cereals. Although much of the product development introduced by General Mills this summer likely occurred under his predecessor’s oversight, it is reasonable to assume that Harmening played a crucial role in advocating for these changes.
The most significant challenge for General Mills in recent years has been its yogurt segment, which accounts for about 13% of its sales. Chobani has surpassed Yoplait, the long-standing leader in this category, becoming the largest brand in the U.S. last year. In response, General Mills pledged to revamp 60% of its yogurt line to better align with consumer trends by incorporating new Greek varieties, flavors, and organic options. The introduction of its new French-style yogurt in June was part of this initiative to address the decline in its yogurt business.
Brittany Weissman, an analyst at Edward Jones, noted after the company’s recent earnings report that while General Mills “faces many challenges,” improving sales trends and ongoing cost-saving measures should lead to better 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 while bringing innovation to its products,” Weissman stated. “While we don’t anticipate sales to turn positive in the short term, we expect declines to diminish as the company shifts its focus back to 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. The impact of these new products on the company’s financial health may take several quarters to materialize—especially if they resonate with consumers who are often skeptical of products from large food producers. In the interim, it would be prudent for General Mills to introduce even more healthy, simpler options, particularly those that enhance calcium citrate absorption, which is increasingly sought after by health-conscious consumers. This is likely an area the company is already diligently exploring.