8 highlights from General Mills at CAGNY
The consumer was top of mind this morning at the annual Consumer Analyst Group of New York conference in Boca Raton, Fla., where companies in the consumer goods industry – including General Mills, ConAgra, Mondeléz, and Kraft – gave investors a look at what’s in store for the 2014 calendar year.
General Mills Chairman and CEO Ken Powell outlined a clear focus on strategies for topline growth in 2014, which put consumers at the center.
“These strategies begin with consumers’ needs – what foods they like, where they shop and how they cook,” said Ken. “We’re particularly focused on four growing consumer groups: older consumers, millennials, multicultural families in the U.S. and middle-class consumers in emerging markets.”
While consumers have weathered headwinds this past year, Ken said the company sees signs of improvement in the U.S. operating environment, pointing to increased consumer spending and a growing U.S. population.
Other presenters today included Don Mulligan, chief financial officer; Chris O’Leary, chief operating officer and executive vice president, International; and Sean Walker, senior vice president and president, Latin America region.
Chris emphasized that outside of the U.S., General Mills is focused on the middle class consumer in emerging markets to drive faster topline growth. Across China, Indonesia, India and Brazil, the sheer number of new middle class households is projected to grow by almost 200 million people between 2010 and 2020.
“These consumers are increasingly pressed for time. As a result, this emerging middle class is looking for convenient food solutions, with strong health credentials and great taste. All of which points to a huge growth opportunity for our business going forward,” Chris said.
While a lot of ground of was covered, here are eight key highlights from today’s presentations:
1. We’re bringing consumers to General Mills brands by driving new product innovation.
We’re bringing health news, increased convenience, great taste and superior product quality to our categories. Most notably, Nature Valley Protein granola, new flavors of Yoplait Greek and Yoplait Greek 100 yogurt, Fiber One 90 Calorie Lemon Bars, Bold varieties of Helper and Old El Paso Mexican frozen meals.
2. We continue to lead performance in the ready-to-eat cereal category in the U.S.
Cereal remains the No. 1 choice for breakfast, appealing to all consumer groups. Through the first half of our fiscal year, we’ve gained cereal share and increased net sales by 2 percent. We’re bringing product news to the category with new Multi-Grain Cheerios Dark Chocolate Crunch cereal, Chocolate Toast Crunch cereal and Fiber One Protein cereal. And we’re maintaining strong marketing support, recently running a Cheerios commercial during the “Big Game”– a first in brand history.
3. Cereal is a global growth category, with tremendous opportunity in emerging markets.
While developed markets still account for the majority of category sales, emerging markets represent growth opportunities. Cereal Partners Worldwide (our joint venture with Nestlé), holds leading share positions in many of the world’s developing and emerging markets – which are expected to drive the majority of the ready-to-eat cereal category sales growth going forward.
4. Our yogurt business is stabilizing in the U.S. and we are growing yogurt around the world.
Yogurt, often referred to as the food of the decade, continues to be one of the hottest food categories with plenty of room to expand as demand continues in both developed and emerging markets. In the U.S., Yoplait Greek 100 – which achieved $150 million in sales the first year – continues to have success and we are winning consumers on the taste of our Yoplait Greek blended yogurt. In Canada, the UK, and France we are helping lead the development of the Greek yogurt segment. We recently introduced Yoplait Yopa! in France and Liberté Greek in the UK. And we have seen good performance with these products in Canada.
5. We have dramatically increased our international exposure.
Fully one-third of General Mills sales are now outside the U.S. As a result of recent acquisitions, including Yoplait and Yoki, more than $6 billion dollars including our proportionate share of joint ventures are now outside the U.S. in fast-growing, attractive categories: ready-to-eat cereal, yogurt, snacks, convenience meals, and super-premium ice cream.
6. Brazil is an attractive market where we are seeing strong growth.
The Yoki acquisition has allowed General Mills to quickly enter the market from a strong position with trusted brands – Yoki and Kitano. These brands enjoy household penetration of over 90 and 70 percent, respectively. In the first 12 months under General Mills ownership, Yoki’s constant currency net sales grew by nearly 20 percent.
7. We are focused on continuous improvement through Holistic Margin Management.
In 2010, we set a goal to achieve $4 billion dollars of Holistic Margin Management (HMM) savings in our cost of goods sold by 2020. HMM drives out non value-added costs and reinvests savings into our brands and capabilities. Cumulative savings through 2013 totaled $1.4 billion dollars, accelerating progress against our goal.
8. We intend to continue to return cash to shareholders.
Dividend growth and stock repurchases are key components of our long-term shareholder return model. In a stock market full of unpredictability, General Mills has a 115-year track record of shareholder dividend payments without reduction or interruption. This year’s dividend rate represents a 15 percent increase.