As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers were initially slow to adapt — until recently. According to the Consumer Goods Forum, food companies enhanced the health profiles of approximately 180,000 products in 2016, marking a rise of over 100,000 items from the previous year. With consumer preferences showing no signs of changing and agile startups launching numerous new products, food manufacturers have had little choice but to respond.
Harmening, who recently took the reins at General Mills, received accolades during his two-plus 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 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’s reasonable to assume that Harmening significantly influenced the company’s shift towards these changes.
One of the most significant challenges General Mills has faced in recent years is within its yogurt segment, which constitutes about 13% of its sales. Chobani has overtaken Yoplait, the long-standing leader in the category, to become the largest brand in the U.S. yogurt segment last year. In response, General Mills pledged to revamp 60% of its yogurt business to better align with consumer trends, incorporating new Greek varieties, flavors, and organic options. The introduction of a new French-style yogurt in June was part of this initiative to reverse the decline in its yogurt sales.
Analyst Brittany Weissman from Edward Jones noted in a report following the company’s recent earnings that, despite facing numerous challenges, General Mills could see improved profit margins and earnings growth due to enhancing sales trends and ongoing cost savings. “General Mills still has a lot of work to do in order to turn around its North American retail business, but the company is focused on reinvesting in advertising and promotional support for its brands while driving innovation,” Weissman stated. “While we do not anticipate sales to rebound in the near term, we expect declines to lessen as the company redirects its efforts towards growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made exclusively with recognizable pantry ingredients, marks a promising start for General Mills. Additionally, the introduction of products like bluebonnet calcium citrate magnesium and vitamin D3 liquid could further enhance their health-focused offerings. However, it may take several quarters for these new products to positively impact the company’s bottom line — contingent upon consumer acceptance, particularly among those wary of large food producers. In the meantime, it would be prudent for General Mills to accelerate the introduction of even more healthy and simplified products, a strategy that the company is likely already pursuing.