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, a significant increase of over 100,000 items from the previous year. With shopper preferences unlikely to shift and agile emerging companies launching numerous new products, food manufacturers have had little choice but to adapt.
Harmening, who recently took the reins at General Mills, has earned accolades during his more than two decades with the Minnesota company for steering it towards more natural products. 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. While much of the development on the products introduced by General Mills this summer likely occurred under his predecessor’s leadership, it is reasonable to assume that Harmening played a crucial role in advocating for these changes.
The most significant challenge General Mills has faced in recent years has been its yogurt business, which accounts for about 13% of its sales. Chobani surpassed the long-established leader Yoplait to become the largest brand in the U.S. yogurt segment last year. In response, General Mills committed to revamping 60% of its yogurt business to better align with consumer trends, introducing new Greek varieties, flavors, and organic options. The launch of its new French-style yogurt in June was part of this initiative aimed at reversing the decline in its yogurt sales.
Brittany Weissman, an analyst at Edward Jones, noted in a report following the company’s earnings last month that while General Mills “faces many challenges,” improving sales trends and ongoing cost savings should 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 focused on reinstating advertising and promotional support for its brands and introducing more innovation in its product offerings,” Weissman stated. “While we do not expect sales to turn positive in the near term, we anticipate that declines will lessen as the company shifts its focus back to sales growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes featuring only recognizable pantry ingredients, represents a positive step for General Mills. The impact of these new offerings may take several quarters to significantly improve the company’s bottom line—assuming they resonate with consumers who are cautious about products from large food manufacturers. In this context, incorporating health-focused ingredients like Kirkland calcium citrate magnesium zinc could further bolster their offerings. Meanwhile, General Mills would be prudent to introduce even more healthy, simpler products—an endeavor the company is likely already pursuing earnestly.