BOCA RATON, FLA. — After a disappointing fiscal 2017, General Mills, Inc. has refocused its North America Retail organization on executing against its growth priorities. The strategy has paid off in steady improvement over the past 20 months, said Jonathan J. Nudi, president of North America Retail.
In a Feb. 19 presentation at the Consumer Analyst Group of New York Conference in Boca Raton, Mr. Nudi said General Mills has seen “clear improvement” in its U.S. business since the start of fiscal 2018 and continuing into fiscal 2019.
“We are holding or growing share in 7 of our top 10 categories this year on top of solid performance a year ago,” he said. “While there’s still work to do in areas like snack bars … we’re encouraged by the broad improvement across these categories, which represent more than 80% of our retail sales base.”
Mr. Nudi said consumer-focused innovation is one of the keys to competing effectively, and General Mills has set itself up well in that regard. Innovation in the first half of fiscal 2019 includes Cheerios Oat Crunch, YQ yogurt and Betty Crocker Mug Treats. In the second half of the year the company plans to roll out Cinnamon Toast Crunch Churros, Go-Gurt Dunkers and Annie’s Sour Bunnies.
“This improved innovation performance has been driven in part by changes we’ve made to our innovation process, leveraging an agile approach we call Consumer First design,” he said. “This mindset favors speed over perfection, pitching business teams to be the fastest to the first dollar by launching products in the market and getting consumer feedback much earlier in the development cycle along multiple opportunities for iteration and improvement before a full-scale roll-out. The result has been accelerating speed-to-market on products like Epic Performance Bars and stronger performance on new platform innovations like Oui by Yoplait.”
In addition to evolving its innovation process, General Mills is exploring new ways to engage consumers with its brands beyond traditional media. Mr. Nudi said the company is investing in new packaging and forming new partnerships.
Speaking more directly to the progress made in individual categories, Mr. Nudi said General Mills has been encouraged by the improvement made in U.S. cereal.
“Over the last six quarters, category retail sales trends have improved sequentially, posting growth over the past three months even without including fast-growing non-major channels,” Mr. Nudi explained. “This improvement has been driven by better fundamental execution by the brand and manufacturers, and we’ve been playing our part. In fact, our strong performance is translating to consistent market share gains and resulted in General Mills taking outright share leadership in the category last year.
“The cereal category thrives when the leading players bring great innovation and consumer news. Supported by engaging brand building and in-store activation, that’s our formula for success.
“Fiscal 2019 has been another great year for General Mills cereal innovation. We launched three of the five largest new products in the category, including Cheerios Oat Crunch, Maple Cheerios and Lucky Charms Frosted Flakes. We have another strong lineup in the second half, including Cinnamon Toast Crunch Churros, which launched last month and is off to a strong start, and Blueberry Cheerios, which hit shelves in our fourth quarter.”
Mr. Nudi said General Mills also has made strides in its U.S. yogurt business, increasing its competitiveness in the category over the past two years. He said the overall U.S. yogurt category has been dragged down by the Greek segment, a category in which General Mills is only a limited player. Instead, General Mills is well positioned in the growing areas of the U.S. yogurt category, including traditional-style yogurts, yogurt for children and the better-for-you segment.
“Our path to growth in U.S. yogurt requires we stabilize our core while bringing category-leading innovations to new segments like ‘simply better’ that are driving growth,” he said. “On our core, real fruit news on original-style Yoplait has helped to churn the single-serve line to growth in fiscal ‘19. And equity flavor extensions like Sour Patch Kids and Jolly Rancher are driving mid-single-digit year-to-date retail sales growth for Go-Gurt.”
Meanwhile, Mr. Nudi said General Mills is putting in a lot of effort to improve its competitiveness in U.S. snack bars.
“We’ll improve our trends in Nature Valley in the back half of fiscal ‘19 with stronger merchandising and compelling innovation, including a new crispy creamy wafer bar that’s launching in the fourth quarter,” he said. “On Fiber One, we’re working to renovate the product line to get it back into the consideration set for weight managers, the brand’s core consumer. Look for that renovation early next fiscal year. In the meantime, we’ll continue to support our new Protein One launch, which has had success leveraging its high-protein, low-sugar positioning. And we’ll continue to increase awareness, broaden distribution and launch exciting innovation on Larabar, a brand that has delivered strong double-digit compound annual growth and retail sales over the past three years.”