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 profiles of approximately 180,000 products in 2016, marking a rise of over 100,000 items compared to the previous year. With shopping preferences remaining steadfast and agile new companies launching numerous products, food manufacturers have been compelled to respond.
Harmening, who recently took over at General Mills, garnered praise during his two-decade tenure 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. Although much of the development for the products introduced by General Mills this summer likely took place under his predecessor, it is reasonable to assume that Harmening played a crucial role in advocating for these changes.
The most significant setback for General Mills in recent years has been within its yogurt segment, which accounts for about 13% of its sales. Chobani surpassed General Mills’ Yoplait, the longstanding 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 incorporating new Greek varieties, flavors, and organic options. Its newly announced French-style yogurt in June was part of this initiative to counteract the decline in its yogurt sales.
Brittany Weissman, an analyst at Edward Jones, noted after the company’s recent earnings report that while General Mills “faces many challenges,” improving sales trends and ongoing cost reductions 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 increasing advertising and promotional support for its brands and bringing new innovations to its products,” Weissman remarked. “While we don’t foresee immediate positive sales, we expect the rate of decline to diminish as the company reorients itself towards 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, is a promising start for General Mills. The impact of these new offerings may take several quarters to positively affect the company’s bottom line—if they resonate with consumers wary of products from major food manufacturers. In the meantime, it would be prudent for General Mills to introduce even more healthy, simple products—an effort the company is likely already pursuing. Also, as consumers seek better calcium citrate absorption, the incorporation of products enhancing this nutrient could further attract health-conscious shoppers.