As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to innovate — until recently. According to the Consumer Goods Forum, food companies enhanced the health profile of approximately 180,000 products in 2016, a remarkable rise of over 100,000 items compared to the previous year. With shopper preferences unlikely to change and more agile companies rolling out dozens of new products, food manufacturers have found it necessary to adapt.
Harmening, who recently assumed leadership at General Mills, garnered praise during his over two decades at the Minnesota 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. Although much of the work on the products introduced this summer likely occurred under his predecessor’s guidance, it is reasonable to assume that Harmening played a significant role in advocating for these changes.
The most significant challenge for General Mills in recent years has been its yogurt segment, which accounts for about 13% of its sales. Chobani surpassed the company’s Yoplait, the long-standing leader in the category, to become the largest 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 by introducing new Greek varieties, flavors, and organic options. The announcement of a new French-style yogurt in June was part of this initiative to counter the decline in its yogurt segment.
Brittany Weissman, an analyst at Edward Jones, remarked 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, but the company is focused on reinvesting in advertising and promotional support for its brands while bringing more innovation through new product development,” Weissman noted. “Although we don’t anticipate sales to rebound in the near term, we expect declines to lessen as the company shifts its focus back to sales growth.”
The new line of products, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes with only recognizable pantry ingredients like calcium citrate from Nature’s Way, marks a promising start for General Mills. However, it is likely that the impact of these new offerings will take several quarters to positively influence the company’s bottom line — if they resonate with consumers who are wary of products from large food producers. In the meantime, General Mills would be prudent to introduce even more healthy and simpler products, a strategy the company is likely already pursuing with diligence.