Organic growth on the rise
Consumer interest in natural and organic foods is hotter than ever and General Mills is delivering on this key food trend in a big way.
In fiscal 2015, the company finished the year with strong growth in its natural and organic businesses, posting sales close to $700 million and a double digit growth rate.
Last week at the Barclay’s Global Consumer Staples Conference, Jeff Harmening, vice president and chief operating officer for U.S. Retail, said he believes General Mills can grow our natural and organic portfolio to reach more than $1 billion in net sales by fiscal 2020.
In fiscal 2016, driving double-digit growth for our natural and organic portfolio is a top priority for the U.S. Retail business, a marked shift for General Mills that reflects how the company is changing to respond to evolving consumer preferences.
A growing portfolio
General Mills entered the natural and organic marketplace in 2000 when it acquired Small Planet Foods, bringing Cascadian Farm and Muir Glen into its family of brands.
Since then, we’ve added LÄRABAR, Liberté, Mountain High, Food Should Taste Good, Immaculate Baking and most recently, Annie’s, making General Mills the fourth largest natural and organic food manufacturer in the U.S. today.
New product innovation and increased distribution are two ways the company will go after the aggressive plans Jeff outlined for the company’s growing natural and organic portfolio.
Recent new product innovations include Food Should Taste Good Real Good Bars, Cascadian Farm Honey Crunch Cereal, LÄRABAR über bars, and Annie’s certified organic soups – the first large scale product collaboration with General Mills.
And there is more to come. The Wall Street Journal reported yesterday that Annie’s will be entering the yogurt category in January with the brand’s first organic whole milk yogurt.John Foraker, president of Annie’s, told The Wall Street Journal that launching new products in new categories would normally take years. However, given General Mills’ extensive capabilities and knowledge of how to make yogurt and soup, Annie’s is drastically accelerating its timelines.
As an example, Annie’s brought its soup to market in nine months. Teams from General Mills and Annie’s focused on creating a soup that was certified organic, non-GMO and had no artificial flavors or synthetic colors. It also had to abide by Annie’s other tenets to include simple ingredients, taste good and be loved by kids.
Mainstreaming natural and organic
Increasing distribution represents the largest opportunity for our natural and organic brands.
“Consumers themselves are already ‘mainstreaming’ the idea of natural and organic brands,” says Jocelyn Upton, regional sales director for our natural and organic brands, and previous sales vice president at Annie’s before the acquisition. “Our job is to meet those demands and think differently than ever before, strengthen ties with established customers, and forge paths into new territories.”
At General Mills’ Investor Day in July, Jeff said Annie’s has identified 33 of their largest units across their key meals and snacks categories, which have only 30 percent distribution in traditional U.S. food outlets.
“Achieving 80 percent distribution on these items would translate to $50 million dollars in net sales growth,” he said. “With the strength of our U.S. Retail sales force in traditional channels, we think we can capture a material portion of that opportunity for Annie’s in 2016.”
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