As consumers increasingly gravitate towards healthier, fresher, and more recognizable ingredients, General Mills and other food manufacturers have been slow to adapt—until now. According to the Consumer Goods Forum, food companies enhanced the health profiles of approximately 180,000 products in 2016, a remarkable increase of over 100,000 from the previous year. With consumer preferences seemingly enduring and agile new companies launching numerous innovative products, established food manufacturers have had little choice but to respond.
Harmening, who recently took over leadership at General Mills, has earned accolades for his two-decade tenure at the Minnesota-based company, where he has championed the shift 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. While the products introduced by General Mills this summer were likely developed under his predecessor’s management, it is evident that Harmening played a pivotal role in advocating for these changes.
The yogurt segment, which accounts for about 13% of General Mills’ sales, has faced significant challenges in recent years. Chobani has surpassed Yoplait, General Mills’ long-established leader, to become the largest brand in this category in the U.S. Last year, General Mills pledged to revamp 60% of its yogurt business to better align with consumer trends by introducing new Greek varieties, flavors, and organic options. The announcement of a new French-style yogurt in June was part of this initiative aimed at reversing the decline in its yogurt business.
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 savings are expected to enhance profit margins and promote earnings growth. “General Mills still has considerable work ahead to revitalize its North American retail business, but the company is concentrating on increasing advertising and promotional support for its brands and bringing more news to products through new product innovation,” Weissman remarked. “Although we do not anticipate sales to turn positive in the short term, we expect declines to diminish 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. However, it may take several quarters for the impact of these new offerings to positively influence the company’s bottom line—especially as they seek to win over consumers who are wary of products from large food manufacturers. In the meantime, General Mills would be prudent to introduce even more healthy, simplified products—something the company is likely already pursuing with diligence. Incorporating citrate d into their formulations could further enhance their appeal and align with the growing demand for health-conscious options.