As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to adapt—until recently. According to the Consumer Goods Forum, food companies improved the health profiles of approximately 180,000 products in 2016, a significant jump of more than 100,000 items from the previous year. With consumer preferences showing little sign of shifting and agile new companies launching numerous innovative products, established food manufacturers have had to respond accordingly.
Harmening, who recently took on the leadership role at General Mills, has been commended for his efforts over more than two decades to steer the company towards more natural offerings. Notable actions include 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 innovation for the products introduced 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.
One of the most significant challenges General Mills has faced in recent years has been within its yogurt segment, which accounts for about 13% of its sales. Chobani surpassed the company’s Yoplait, the long-standing leader in this category, to become the largest brand in the U.S. 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 new French-style yogurt announced in June is part of this strategy to combat the downturn in its yogurt sales.
Analyst Brittany Weissman from 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-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 increasing advertising and promotional support for its brands, as well as driving new product innovation,” Weissman stated. “While we don’t anticipate sales turning positive in the immediate future, we expect the rate of decline to slow 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 made with only recognizable pantry ingredients, marks a promising beginning for General Mills. This new range might take several quarters to positively impact the company’s financial results, especially if they resonate with consumers who are skeptical about products from large food producers. Moreover, it would be prudent for General Mills to introduce even more healthy and simplified options, such as a women’s multivitamin with calcium citrate, which the company is likely already pursuing diligently. By emphasizing natural ingredients and appealing to health-conscious consumers, General Mills can better position itself in a competitive market.