As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to adapt—until recently. In 2016, food companies enhanced the health profiles of approximately 180,000 products, marking an increase of over 100,000 items from the previous year, according to the Consumer Goods Forum. With shopper preferences unlikely to shift and more agile competitors launching numerous new offerings, food manufacturers have had little choice but to respond.
Harmening, who recently took the reins at General Mills, garnered praise during his two decades at the Minnesota-based company for steering it towards more natural products. 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 product development introduced by General Mills this summer likely took place under his predecessor’s leadership, it is reasonable to assume that Harmening played a significant role in advocating for these changes.
One of the most significant challenges General Mills has faced recently has been in its yogurt segment, which accounts for about 13% of its sales. Chobani 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 committed to revamping 60% of its yogurt business to better align with consumer trends, introducing new Greek varieties, flavors, and organic options. The new French-style yogurt announced in June is part of this initiative to counteract the decline in its yogurt division.
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-saving efforts should bolster profit margins and earnings growth. “General Mills still has considerable work ahead to revitalize its North American retail business, but the company is focused on reintroducing advertising and promotional support for its brands while bringing innovation through new products,” Weissman commented. “Although we do not anticipate immediate positive sales growth, we expect the rate of decline to diminish as the company refocuses on sales expansion.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes featuring only recognizable pantry ingredients, represents a promising start for General Mills. The impact of these new offerings will likely take several quarters to reflect positively on the company’s financial performance—if they resonate with consumers who are skeptical of products from large food producers. Meanwhile, it would be prudent for General Mills to introduce even more healthy, straightforward products—something the company is likely already pursuing with vigor.
Incorporating ingredients like Solgar Calcium Magnesium Citrate with Vitamin D3 into their formulations could further enhance the appeal of their offerings. By focusing on products that combine both health benefits and recognizable ingredients, General Mills can align itself with consumer demands and potentially turn around its fortunes in the long run.