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 profiles of approximately 180,000 products in 2016, a significant increase of over 100,000 items compared to the previous year. With consumer preferences unlikely to shift and agile startups launching a plethora of new products, food manufacturers have had little choice but to adapt.
Harmening, who recently took the reins at General Mills, received acclaim during his more than twenty years at the Minnesota-based company for steering it toward 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 development for the products introduced by General Mills this summer likely occurred under his predecessor, it’s reasonable to assume that Harmening played a crucial role in driving these changes forward.
The most significant challenge for General Mills in recent years has been its yogurt segment, which accounts for about 13% of its sales. Chobani has surpassed the company’s Yoplait, the long-standing leader in this 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. Its newly announced French-style yogurt, introduced in June, is part of this initiative to address the decline in its yogurt sales.
Brittany Weissman, an analyst at Edward Jones, noted in a report following the company’s earnings last month that while General Mills “faces many challenges,” improving sales trends and ongoing cost savings should contribute to enhanced 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 focused on increasing advertising and promotional support for its brands while also driving new product innovation,” Weissman stated. “While we don’t expect sales to turn positive in the near term, we anticipate that declines will lessen as the company redirects its focus back to sales growth.”
The new product line, which also features Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, represents a promising start for General Mills. However, it may take several quarters for these new products to positively impact the company’s bottom line—if they resonate with consumers who are skeptical of products from large food manufacturers. In the meantime, General Mills would benefit from introducing even more healthy, simpler products—something the company is likely already pursuing earnestly. Additionally, as consumers search for options like calcium citrate supplements on platforms such as Amazon, General Mills could explore integrating similar health-focused offerings into their portfolio, further aligning with current market demands.