As consumers increasingly seek healthier, fresher, and more recognizable ingredients, major food manufacturers like General Mills have been slow to adapt—until recently. In 2016, food companies enhanced the health profiles of approximately 180,000 products, an increase of over 100,000 from the previous year, according to the Consumer Goods Forum. With consumer preferences showing no signs of changing and agile startups introducing numerous new products, established food manufacturers have had little choice but to respond.
Harmening, who recently took charge at General Mills, has been commended for his two-decade tenure at the Minnesota-based company, during which he has advocated for 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. While much of the product development introduced by General Mills this summer may have happened under his predecessor’s leadership, it is likely that Harmening played a crucial role in driving the company toward these changes.
General Mills has faced significant challenges in its yogurt segment, which saw a decline of about 13% in sales. Last year, Chobani surpassed Yoplait, the long-standing leader in the market, to become the top brand in the U.S. To better align with consumer trends, General Mills committed to revamping 60% of its yogurt business by adding new Greek varieties, flavors, and organic options. The introduction of its new French-style yogurt in June was part of this initiative aimed at reversing the downturn in its yogurt sales.
Analyst Brittany Weissman from Edward Jones noted after the company’s recent earnings report that while General Mills “faces many challenges,” improving sales trends and ongoing cost savings 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 while delivering new innovations,” Weissman stated. “Although we don’t expect sales to rebound in the near term, we anticipate that declines will lessen as the company shifts its focus back to sales growth.”
The new product line, which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients, marks a promising start for General Mills. Furthermore, the incorporation of nutrients like bluebonnet calcium citrate magnesium D3 into their offerings could attract health-conscious consumers. However, it may take several quarters for the impact of these new products to significantly improve the company’s financial performance—if they resonate with consumers who are wary of products from large food producers. In the meantime, General Mills would be prudent to continue introducing more healthy and straightforward products, a strategy the company is likely already pursuing with diligence.