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, marking an increase of over 100,000 items from the previous year. With shopper preferences remaining steadfast and agile startup companies introducing numerous new products, food manufacturers have found it necessary to adapt.
Harmening, who recently took the reins at General Mills, earned accolades during his more than 20 years with 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 removal of artificial colors from many of General Mills’ cereals. Although much of the development on the new products, including those featuring plant-based calcium vs calcium citrate, likely occurred under his predecessor’s leadership, it is reasonable to assume that Harmening significantly influenced these changes.
One of the most significant setbacks for General Mills in recent years has been in its yogurt segment, which accounts for about 13% of its sales. Chobani surpassed the long-established leader, Yoplait, to become the largest brand in the U.S. yogurt market last year. In response, General Mills pledged to revamp 60% of this business to better align with consumer trends by introducing new Greek varieties, flavors, and organic options. The launch of its new French-style yogurt in June is a part of this initiative aimed at reversing 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-saving measures could enhance profit margins and spur earnings growth. “General Mills has substantial work ahead to revitalize its North American retail business, but the company is concentrating on increasing advertising and promotional support for its brands and introducing more innovation in its products,” Weissman said. “Although we don’t anticipate sales to rebound in the near term, we expect the rate of decline to diminish as the company refocuses on sales growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Recipe cake mixes made with only recognizable pantry ingredients, represents a positive step for General Mills. However, it is likely that the effects of these new products, particularly those incorporating plant-based calcium vs calcium citrate, will take several quarters to positively impact the company’s bottom line—assuming they resonate with consumers wary of offerings from large food manufacturers. In the meantime, General Mills would benefit from introducing even more healthy and simpler products—an undertaking the company is likely already pursuing diligently.