NEW YORK — Changing consumer trends are seen as an opportunity for growth at General Mills, Inc., said Ken Powell, chairman and chief executive officer of the Minneapolis-based company.
|Ken Powell, chairman and c.e.o. of General Mills|
“Today’s consumer is changing quickly, so we are putting all our effort toward understanding and responding to these changes in ways that will grow our business,” Mr. Powell said during the company’s Fiscal 2017 Investor Day on July 13 in New York. “This change provides some exciting opportunities for us, and we see four key trends that will be important drivers of our future growth.”
First, consumers increasingly are seeking products that are minimally processed and made with recognizable ingredients, he said.
“It can come to life in foods that have more protein or fiber or whole grain or are free from things like gluten or artificial ingredients,” Mr. Powell said. “For many consumers, organic is an increasingly appealing choice, and these consumers are looking for transparency from manufacturers so they can know how their food was sourced, produced, and delivered to them.”
In addition to expanding its organic offerings through such brands as Annie’s, Cascadian Farm and Liberte, General Mills is reformulating some of its products to align with consumer desire for simple ingredients. As an example, the company is introducing new Old El Paso taco shells made with three simple ingredients.
The second trend is the rise of the millennial generation, which has inspired such recent innovations from General Mills as new handheld Totino’s Pizza Sticks and Tiny Toast cereal.
“This cohort is large and diverse, with a unique set of values and a different way of consuming information than the generations that preceded them,” Mr. Powell said. “And millennials are very influential; not only because of the trends they set that expand to other adult generations, but because right now they are forming families and imparting their values on the next generation of consumers.”
The third trend influencing product development at General Mills is the “dramatic” rise in snacking, Mr. Powell said, noting nearly a fourth of snack foods are eaten as part of traditional meals. In response, new products include more handheld and on-the-go options.
And, fourth, despite near-term challenges, emerging markets represent a “once-in-a-generation growth opportunity” as millions of consumers enter the middle class and seek quality and convenience from foods they buy, Mr. Powell said.
“Our business portfolio is built to capitalize on these consumer trends and drive growth. Today more than 75% of our worldwide net sales are concentrated in five categories that are aligned with consumer demands for great-tasting, wholesome, convenient foods.”
Those five categories are ready-to-eat cereal, which at $3.6 billion represents just over 20% of General Mills’ global net sales; snacks, generating $3.3 billion in annual net sales globally; yogurt, with $2.8 billion in sales; convenient meals, also $2.8 billion; and ice cream, which generated more than $900 million last year.
“We like these global categories because we have technical capabilities and leading brands that allow us to capitalize on their size and their growth prospects,” Mr. Powell said. “According to Euromonitor, these categories combine to generate more than $500 billion in global retail sales in 2015, and they’re projected to grow at low- to mid-single-digit rates over the next five years.”For fiscal 2017, General Mills projects net sales down 2% to flat from the prior year, and total segment operating profit growth of 6% to 8%.