Feb 21, 2012 • By

Driving growth in a challenging business environment

Today at the Consumer Analyst Group of New York (CAGNY) annual conference, General Mills continued its tradition of hosting the opening breakfast and kicking off the week as CAGNY’s first presenters.

This is my sixth year attending the conference with General Mills, and I always look forward to meeting with industry analysts and media to talk about the business and consumer trends in our industry.

Our breakfast event is one that everyone looks forward to. Cereal from around the world is served, of course, but we don’t stop there. Attendees can stop by the smoothie bar for a Yoplait Smoothie, have a hot breakfast of Pillsbury Scrambles or Cinnamon Rolls, try our new flavors of Yoplait and Liberté yogurt, and grab a few Nature Valley, Fiber One and Lärabar snack bars for later.

During the presentation, General Mills Chairman and Chief Executive Officer Ken Powell acknowledged the difficult operating environment for consumer products companies, but said General Mills’ five core strategies continue to represent a road map for success.

“Our companywide innovation and our focus on margins underpin our growth,” said Ken. “Our strategies for international expansion, strong customer collaboration and effective brand-building drive topline sales. Together, these strategies give us great confidence in General Mills’ continuing, global growth.”

Ken also said packaged food continues to be a resilient and growing business. “That’s certainly true in the U.S., where a higher percentage of meals are being made at home – or carried from home – today than at any time in the last decade,” he said.

Cereal Partners Worldwide (CPW) Chief Executive Officer Christi Strauss sees upside in the global cereal business as well. She joined us all the way from CPW’s headquarters in Lausanne, Switzerland. In her presentation, Christi said that CPW – General Mills’ joint venture with Nestlé – is just starting its 21st year in operation, and is continuing to grow at a strong pace.

The most exciting aspect of CPW’s business, said Christi, is that “more than half of today’s cereal consumption happens in just four countries – the U.S., Canada, the UK and Australia. But those markets represent only 6 percent of the world’s population. The rest of the world – with the other 94 percent of the population – is an emerging market for ready-to-eat cereal, and for CPW.”

Christi said CPW is the leading cereal company in many emerging markets around the globe. She said CPW’s marketing efforts are designed to drive consumer awareness for our products – to educate consumers on the nutritional benefits of cereal, and highlight its relevance and affordability.

Shawn O’Grady, president of Consumer Foods Sales, talked to analysts today about partnering with customers to drive profitable growth for their business – and ours.

He discussed the capabilities we bring to retailers, including the shopper-based view of each retailer’s market. “Every year, we talk to more than 50,000 shoppers so we can tell our retailers their position in the market and how that position changes throughout the year,” said Shawn.

Shawn also said we are working with many of our key customers to optimize the entire supply chain – from our plant to the customer’s shelf – to identify cost savings opportunities that can be reinvested to drive sales growth. This is particularly important in the current inflationary environment.

He discussed a new program called GEOS, General Mills End to End Optimization. “We recently worked with one of our largest customers to unlock nearly $3 million in supply chain savings,” said Shawn. “A significant portion of those savings were reinvested into a major merchandising event that will drive sales growth for our customer and for us.”

Speaking of cost savings, John Church, senior vice president of Supply Chain, gave analysts an update on Holistic Margin Management, our unique approach to offsetting rising input costs to keep our products affordable.

“It is not a traditional cost-cutting program – HMM is an innovation process to identify and eliminate waste – and redeploy the captured savings,” said John.

John shared an example of HMM in our Cheerios business and an example in our grain snacks business.

“Using our Continuous Improvement tool, a team of General Mills employees – working across two manufacturing locations – created 5 million cases of additional manufacturing capacity in our snacks business – with only minimal capital investment,” he said. “These improvements have also lowered our grain manufacturing cost per case, and provide a model we are now applying to other manufacturing platforms.”

Ken wrapped up the presentation with examples of the powerful marketing and product innovation that General Mills expects to drive its business going forward. “Our business plans for 2012 and beyond include strong levels of renovation and innovation, designed to drive growth in our categories,” he said.