Consumers come first: General Mills at CAGNY 2016
2016 is an important year for General Mills – We’re celebrating our 150th anniversary as a company. We trace our roots to the first Washburn Company flour mill on the banks of the Mississippi River in Minneapolis in 1866.
Along the way we have introduced and created some of the world’s most iconic and beloved food brands: Gold Medal Flour, Wheaties, Cheerios, Betty Crocker, Yoplait, and Pillsbury, to name a few. And we’re growing newer brands like Annie’s, Larabar, Cascadian Farm and Muir Glen.
We’ve been making food people love for 150 years. And at the center of it all has been the consumers we serve.
That remains our key strategy to delivering growth and sustainable top-tier returns to shareholders. We call it Consumer First. Today General Mills Chairman and CEO Ken Powell detailed our strategy to analysts and investors at the annual Consumer Analysts Group of New York conference in Boca Raton, Florida.
“Very simply, this means focusing on our consumers, understanding them deeply, and giving them what they want. In a time of rapid change, with consumers constantly moving, we believe this Consumer First strategy is more important than ever,” Ken said.
Ken was joined today by Don Mulligan, chief financial officer; Jeff Harmening, executive vice president and chief operating officer, U.S. Retail; and Chris O’Leary, executive vice president and chief operating officer, International, who detailed the company’s key priorities and how our renewed focus on the consumer will enable long-term, sustainable growth for General Mills.
Modernizing our product portfolio
“As we look over the landscape today, we see the consumer changing quickly and all of our effort is focused on understanding and responding to these changes in ways that will grow our business – that’s Consumer First in action,” said Ken.
One of the biggest ways we are putting consumers first is through contemporizing our core products to meet changing food preferences.
In the U.S., one of the most notable efforts has been taking Cheerios gluten free. According to Jeff, the results of this effort are encouraging. Honey Nut Cheerios – our largest single variety and the No. 1 selling cereal in the category – recently posted its best quarter of growth in almost four years. And we’re transitioning Fruity and Chocolate Cheerios varieties to gluten free later this summer.
Another major effort has been our commitment to remove artificial flavors and colors from artificial sources from our cereals. Today 75 percent of the portfolio now meets this claim. Jeff said that we’ve seen retail sales trending positive on recently renovated cereals including Reese’s Puffs, Golden Grahams, and Trix.
General Mills plans to introduce four more renovated cereal products in June, putting us well on our way to reach 90 percent of our portfolio by next January.
General Mills has also made significant investments to meet growing consumer interest in natural and organic foods. Since 2000, General Mills has acquired a portfolio of natural and organic brands that totaled $675 million dollars in net sales last year, ranking General Mills as the third largest natural and organic food maker in the U.S. Most recently, the company acquired meat snacks maker EPIC Provisions. Listen to Jeff talk about the natural and organic outlook, in this interview).
“We now expect to reach $1 billion dollars in net sales from natural and organic products by 2019 without additional acquisitions,” Jeff said.
General Mills plans to launch Annie’s cereals this summer with three certified organic, whole grain varieties – Berry Bunnies, Cocoa Bunnies and Frosted Oat Flakes.
Serving Consumers around the World
We’re not just focused on U.S. consumers. At $6 billion dollars – including our share of joint ventures – our International business represents a third of total company sales. Just over 60 percent of our International segment’s net sales are in developed markets like Canada and Europe, with the remainder in emerging markets like China, Brazil, India, AMEA and Mexico, where an emerging population of middle class consumers seek convenient, great tasting foods at a great value.
According to Chris, in Europe and Canada, we’re giving time-challenged consumers convenient meal options with a premium line of Old El Paso Restaurante meal kits. We’ve introduced a line of Parampara Indian spice mixes in the U.K. and Australia and Indian meal kits in France. All designed to meet the increasing popularity of Indian cuisine in these markets.
And we are also meeting an increasing global interest in snacking.
There is probably no better-tasting snack than Häagen-Dazs ice cream, which is posting strong growth in Europe, led by our premium stick bars in France. Chris says we will introduce stick bars in more markets later this fiscal year. And we’ve also introduced frozen yogurt in Häagen-Dazs shops in China, where consumer response has been positive.
And in India, we’re meeting demand for sweet snacks with new chocolate spreads which consumers eat with traditional Indian breads.
We’re also addressing consumer interest in healthier foods with the launch of Yoplait yogurt last summer in Shanghai.
“Chinese consumers really like the thick, creamy texture of our premium Perle de Lait yogurt, so we’ve introduced new flavors and limited edition bonus backs for Chinese New Year,” said Chris.
Last month General Mills entered the $5 billion dollar Brazilian yogurt market with the acquisition of Carolina, a regional dairy products producer with strong yogurt brands including Carolina, VeryGurt and Gluck. The yogurt category in Brazil is projected to grow at a 10 percent compound rate over the next five years.
If you missed today’s presentation at CAGNY, you can listen to a replay of the webcast in the Investor Relations section of GeneralMills.com.
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