General Mills focused on cereals and yogurt innovation, says CEO

General Mills will focus on growing its cereal venture with Nestlé and look to revive the fortunes of its yogurt brands by investing in new product development.

New CEO Jeff Harmening has told investors that it remains ‘laser-focused’ on knowing its consumers and understanding what’s important to them, as it continues a seemingly endless struggle to overturn decline in quarter-on-quarter revenues.

Last month, the company posted a 3% dip in fourth-quarter sales, meaning it’s now been two years since it enjoyed a quarter of growth. Full-year sales also fell by 6%: turnover for the year stood at $15.62 billion, with decline driven by volume reductions in developed markets like North America, Europe and Australia.

The results were a baptism of fire for Harmening, who only took over from Ken Powell in June.

He has pledged to concentrate on four key areas, including growing its Cereal Partners Worldwide joint venture with Nestlé and driving growth in yogurt brands like Yoplait and Liberté by concentrating on innovation.  

The company will invest in ‘differential growth opportunities’ – including the company’s global Häagen Dazs and Old El Paso businesses, global snack bars platform, and its portfolio of natural and organic brands across North America. With roughly $4 billion dollars in combined net sales, they’re a meaningful portion of the company’s overall business.

It also promised ‘appropriate investment’ in its foundation businesses – the likes of refrigerated dough, soup, and baking mixes that continue to deliver consistent profit to fund top-line growth initiatives.

Despite the fact that volume growth has fallen flat in developed markets, Harmening is focused on how – not how much – the company sells.

“While the biggest shift in our industry in the last five years was driven by changing consumer food values, I believe the most significant change that will impact the next five years will be in how consumers get their food, driven by the rapid acceleration of e-commerce.

“We see this as an exciting opportunity for General Mills,” Harmening said.

E-commerce represents about 1.5% of the company’s total sales in the US today. The company expects this number to grow to 5% by fiscal year 2020. It also continues to see strong double-digit growth ahead for its global e-commerce business, led by the US.

Harmening’s vision for the company, relayed to investors at its annual Investor Day in New York, includes a total of 18 global priorities – including those four key areas around cereal, yogurt, investment and growth.

There is evidence that General Mills’ cost-cutting programme, as well as its focus on five global growth platforms – cereal, yogurt, snacks, convenient meals and super-premium ice cream – is helping to make it leaner and more competitive. It reported strong adjusted margins and operating profit up 16% in the last quarter of 2016.

And in December, it unveiled a new organisational structure that centred around four business units, which General Mills said would help it support growth and maximise scale.