MINNEAPOLIS — Annie’s organic yogurt, Nature Valley nut butter biscuits and cereals without artificial flavors and colors are expected to help drive improved U.S. retail sales performance for General Mills, Inc. in the coming quarters. Product innovation and renovation, plus increased levels of marketing and merchandising are crucial components of the Minneapolis-based company’s strategy to reverse recent declines in the cereal, yogurt and grain-based snacks categories.
|Ken Powell, chairman and c.e.o. of General Mills|
“Our top priority in U.S. retail this year is to drive growth in cereal, and our net sales are up 1% year-to-date,” said Ken Powell, chairman and chief executive officer, during a Dec. 17 earnings call with financial analysts.
The launch of gluten-free Cheerios and strong growth of Cinnamon Toast Crunch have helped improve General Mills’ performance in the category.
“Earlier this year, we announced our plan to remove artificial flavors, colors and high-fructose corn syrup from all Big G cereals by 2017,” Mr. Powell said. “Nearly 80% of our brands will meet that claim by January. We will begin marketing this renovation news in the third quarter with an in-store merchandising event, TV support, coupons and digital advertising.”
The company also plans to expand its Nature Valley brand in the second half of the year with new ready-to-eat cereals.
“Later in fiscal 2016, we’ll launch a Batman and Superman promotion featuring two new cereals and more in-store merchandising activities,” Mr. Powell said. “These new cereals feature high-impact foil-embossed packaging and unique flavors, which should appeal to teenage and millennial consumers.
“And we are increasing our U.S. cereal media investment in the second half behind some great campaigns. In total, we expect our renovation, innovation and investment plans will drive improved retail sales performance for our cereal business in the second half of fiscal 2016.”
In the first half of the year, the company’s grain snacks business grew market share, but retail sales growth slowed due to lower merchandising levels.
“Our plan to strengthen retail sales performance starts with core brand renovation,” Mr. Powell said. “We’ve reformulated our Nature Valley Crunchy Bar line in the second quarter to make the product easier to bite. We turned on TV support for this news last month and baseline sales have responded positively.
“We continue to bring compelling innovation to our grain snacks business. We launched Fiber One Cheesecake in the first half, and it’s already a top turning item in the category. Next month, we are capitalizing on growing consumer interest in alternative nut butters with the launch of Nature Valley Nut Butter Biscuits, and we are introducing a line of kid-focused grain snacks leveraging movie equities.”
In the yogurt category, increased competitive activity soured General Mills’ first-half results. The company is planning increased merchandising support and two significant product launches.
“We will expand our Plenti Greek yogurt line with six new Plenti oatmeal varieties that combine oatmeal and Greek yogurt to bring consumers a more satiating morning snack,” Mr. Powell said. “In addition, we are bringing Annie’s to the yogurt category with a new family-focused line of organic yogurts made with whole milk and real fruits.”
Net sales in the U.S. retail segment fell 4% to $2,761.9 million for the second quarter and were flat at $5,293.1 million for the first half of the fiscal year.“In total, we expect our U.S. retail business to deliver improved retail sales performance in the second half driven by increased investment on key renovation news, an excellent lineup of Consumer First innovation and a higher level of merchandising support,” Mr. Powell said.