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 from the previous year. With consumer preferences showing little sign of changing and agile startup companies launching numerous new products, established food manufacturers have had little choice but to adapt.
Harmening, who recently took the reins at General Mills, received commendation during his over two-decade tenure 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 elimination of artificial colors from many of General Mills’ cereals. Although much of the development on products introduced this summer likely occurred under the supervision of his predecessor, it’s reasonable to assume that Harmening was instrumental in advocating for these changes.
One of the most significant challenges General Mills has faced in recent years has been in its yogurt sector, which constitutes about 13% of its sales. Last year, Chobani surpassed the long-established leader Yoplait to become the largest brand in the U.S. yogurt market. In response, General Mills pledged to revamp 60% of its yogurt business to better align with consumer trends by adding new Greek variants, flavors, and organic options. The announcement of its new French-style yogurt in June was part of this initiative to counteract the decline in its yogurt segment.
Brittany Weissman, an analyst at Edward Jones, noted after the company’s recent earnings report that while General Mills “faces many challenges,” improving sales and ongoing cost-saving measures should enhance 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 concentrating on increasing advertising and promotional support for its brands, as well as introducing more innovative products,” Weissman stated. “While we don’t anticipate sales turning positive in the short term, we expect declines to diminish as the company refocuses on growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes featuring only recognizable pantry ingredients, represents a solid foundation for General Mills. 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 wary of products from major food manufacturers. In the interim, General Mills would benefit from rolling out even more healthy, simpler products—an endeavor the company is probably already pursuing earnestly. Additionally, integrating life calcium citrate into their offerings could enhance their appeal, as consumers are increasingly seeking products that contribute to their overall health and wellness.