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 profile of approximately 180,000 products in 2016, marking an increase of over 100,000 items from the previous year. With shopper preferences stabilizing and agile startup companies launching numerous new products, established food manufacturers had little choice but to respond.
Harmening, who recently took the reins at General Mills, received accolades during his two decades at 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 General Mills cereals. Although much of the product development for this summer’s launches likely occurred under his predecessor’s leadership, it is reasonable to assume that Harmening played a pivotal role in advocating for these changes.
General Mills has faced significant challenges in its yogurt segment, which constitutes about 13% of its sales. Last year, Chobani surpassed the long-time leader, Yoplait, to become the largest brand in the U.S. yogurt market. In response, General Mills committed to revamping 60% of its yogurt business to better align with consumer trends by introducing new Greek varieties, flavors, and organic options. The announcement of a 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 after the company’s recent earnings report that while General Mills “faces many challenges,” improving sales trends and sustained 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 reinvesting in advertising and promotional support for its brands, as well as innovating new products,” Weissman stated. “While we do not expect sales to turn positive imminently, we anticipate that declines will lessen as the company refocuses on growth.”
The introduction of new products, including Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, represents a promising start for General Mills. These offerings may take several quarters to positively impact the company’s bottom line—provided they resonate with consumers wary of products from major food manufacturers. In the interim, it would be prudent for General Mills to continue developing even more healthy and simplified products, a pursuit that the company is likely already undertaking. Additionally, incorporating items like Citracal Maximum Plus could further enhance their product lineup, appealing to health-conscious consumers and reinforcing their commitment to better nutrition.