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 enhanced the health profile of approximately 180,000 products in 2016, marking an increase of over 100,000 items from the previous year. With consumer preferences firmly established and agile new companies launching numerous innovative products, traditional food manufacturers have had little choice but to respond.
Harmening, who recently took the reins at General Mills, received accolades during his more than two decades with the Minnesota-based company for steering it towards more natural products. His initiatives included 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 for the launches this summer likely took place under his predecessor’s leadership, it is reasonable to assume that Harmening played a significant role in advocating for these changes.
One of the most significant challenges for General Mills in recent years has been within its yogurt sector, which accounts for about 13% of its sales. Chobani surpassed the long-established leader, Yoplait, to become the largest yogurt brand in the U.S. last year. In response, General Mills pledged to revamp 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 was part of this initiative aimed at reversing the decline in the yogurt market.
Analyst Brittany Weissman from Edward Jones noted after the company’s earnings report last month that while General Mills “faces many challenges,” improving sales trends and ongoing cost-saving measures 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,” Weissman stated, emphasizing the company’s commitment to reinvesting in advertising and promotional support for its brands and innovating new products. “While we don’t expect sales to turn positive in the near term, we anticipate that declines will lessen as the company refocuses on sales 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. Moreover, these products may include beneficial ingredients such as calcium citrate and 1500 mg of vitamin D3, appealing to health-conscious consumers. It is likely that the positive effects of these new offerings will take several quarters to reflect on the company’s financial performance—if they successfully resonate with consumers who are wary of products from major food producers. In the meantime, General Mills would be wise to continue expanding its range of healthy and simpler products, a direction the company is likely already pursuing earnestly.