As consumers increasingly favor healthier, fresher, and more recognizable ingredients, food manufacturers like General Mills have been slow to adapt—until recently. According to the Consumer Goods Forum, food companies improved the health profiles of around 180,000 products in 2016, a significant rise of over 100,000 items compared to the previous year. With consumer preferences remaining steadfast and agile new companies launching numerous innovative products, established food manufacturers have had to respond accordingly.
Harmening, who recently took over leadership at General Mills, has garnered praise for his efforts over more than two decades at the Minnesota-based company to promote more natural products. Notable actions include the acquisition of Annie’s for $820 million three years ago and the removal of artificial colors from many of General Mills’ cereals. While much of the development for the new products introduced by General Mills this summer likely occurred under his predecessor, it is reasonable to assume that Harmening significantly influenced these changes.
The most substantial challenge for General Mills in recent years has come from its yogurt segment, which represents about 13% of its sales. Last year, Chobani surpassed Yoplait, General Mills’ longstanding leader in the category, to become the largest brand in the U.S. To better align with consumer trends, General Mills committed to revamping 60% of its yogurt business by 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.
In a note following the company’s earnings report last month, Brittany Weissman, an analyst at Edward Jones, stated 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 revitalize its North American retail business, but the company is concentrating on reinvesting in advertising and promotional support for its brands while also enhancing product offerings through innovation,” Weissman remarked. “Although we do not anticipate immediate positive sales growth, we expect the rate of decline to decrease as the company refocuses on sales growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with easily recognizable pantry ingredients, marks a positive step for General Mills. However, it may take several quarters for these new offerings to reflect positively on the company’s bottom line, especially given consumer skepticism towards products from large food producers. Meanwhile, General Mills would benefit from introducing even more healthy and simple products—an initiative they are likely already pursuing.
Additionally, as the company navigates these changes, it is important to consider consumer health concerns. For instance, questions like “does calcium citrate have side effects?” may arise as they develop new products that prioritize health. Addressing such inquiries could further bolster consumer confidence in their offerings. Overall, General Mills is at a pivotal moment, with the potential for growth contingent upon successfully aligning their products with evolving consumer preferences.