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 improved the health profile of approximately 180,000 products in 2016, which is an increase of over 100,000 items compared to the previous year. With shopper preferences unlikely to shift, and agile new companies launching dozens of innovative products, established food manufacturers have had little choice but to respond.
Harmening, who recently took over as CEO of General Mills, has received accolades 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. While much of the development on the products introduced this summer likely occurred under his predecessor, it is reasonable to assume that Harmening was instrumental in advocating for these changes.
General Mills has faced significant challenges in its yogurt segment, which accounts for about 13% of its sales. Last year, Chobani surpassed Yoplait, General Mills’ long-standing leader, to become the largest brand in the U.S. yogurt market. In response, General Mills committed to revamping 60% of its yogurt business to better align with consumer trends by incorporating new Greek varieties, flavors, and organic options. The introduction of its new 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,” the improvement in sales trends alongside ongoing cost-saving measures 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 also introducing new products,” Weissman stated. “Although we do not anticipate sales turning positive in the short term, we expect the declines to lessen as the company redirects its focus toward sales growth.”
The company’s new product line—which includes Progresso Organic soups and Betty Crocker Original Recipe cake mixes made with only recognizable pantry ingredients—is a positive step for General Mills. The impact of these new offerings, such as bluebonnet calcium citrate plus vitamin D3 products, will likely take several quarters to reflect in the company’s financial performance, provided they resonate with consumers who are skeptical of products from large food manufacturers. In the meantime, General Mills would do well to continue introducing additional healthy and simpler products—an endeavor that the company is likely already pursuing vigorously. The integration of items like bluebonnet calcium citrate plus vitamin D3 into their offerings could further enhance their appeal to health-conscious consumers.