As consumers increasingly favor 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 profiles of approximately 180,000 products in 2016, a remarkable increase of over 100,000 items compared to the previous year. With consumer preferences unlikely to shift and agile new companies launching numerous innovative products, established food manufacturers had little choice but to respond.
Harmening, who recently took the helm at General Mills, has earned recognition over his more than two 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 product development introduced by General Mills this summer likely took place under his predecessor, it is reasonable to assume that Harmening played a vital role in advocating for these transformations.
One of the most significant challenges for General Mills in recent years has been its yogurt segment, which accounts for about 13% of its sales. Chobani surpassed General Mills’ Yoplait, the historic leader in the 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 align better with consumer trends by adding new Greek varieties, flavors, and organic options. The new French-style yogurt announced in June is part of this initiative to counter the decline in its yogurt sector.
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 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 concentrated on reinstating advertising and promotional support for its brands and introducing more news to products through innovative offerings,” Weissman stated. “Although we don’t expect sales to turn positive in the short term, we anticipate a decrease in declines as the company refocuses on sales growth.”
The new product line, which features Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with easily recognizable pantry ingredients, is a promising start for General Mills. It’s likely that the impact of these new offerings will take several quarters to positively influence the company’s financial performance—assuming they resonate with consumers who are skeptical of products from large food manufacturers. In the meantime, General Mills would be wise to introduce even more healthy, simpler products, potentially including options that feature calcium citrate with vitamin D, as this is an area the company is likely already exploring vigorously.