NEW YORK — General Mills, Inc.’s new strategy is similar to its old strategy, with one significant difference — It is enhancing its capabilities on bringing global insights to local markets. The company’s global footprint is vast, with leading brands in markets and categories throughout the world, and under the leadership of Jeffrey L. Harmening, chief executive officer, the company will leverage its global insights to deliver innovation at the local level.
During General Mills’ July 12 Investor Day in New York City, an analyst asked Mr. Harmening, who was tapped to lead the company this past May, how his go-to-market strategy will differ from his predecessor, Kendall J. Powell.
|Jeff Harmening, c.e.o. of General Mills|
“ … The fact that we’re structured more globally and now our priorities are being expressed globally,” he said. “And … the fact that we have fewer layers and now have an organization that's more global.”
While much focus has been on General Mills’ weak performance in North America, Mr. Harmening emphasized that many of the issues emerging in the United States are occurring around the world, whether it is in how consumers perceive health or in how digital technologies are affecting the sale and delivery of foodstuffs.
“We see a once-in-a-generation opportunity as the middle class grows by the millions in many emerging markets, bringing new consumers looking for high-quality, convenient, value-added foods,” he said. “And new technology is rapidly changing how consumers interact with brands and, increasingly, how they get their food.
“In fact, while the biggest shift in our industry in the last five years has been driven by changing consumer food values, I believe that the most significant change that will impact the next five years will be how consumers get their food, driven by the rapid acceleration of e-commerce globally ….The highest level of e-commerce development in food is in Asia, while Europe is not too far behind, especially in markets like the U.K. and France. The U.S. is actually trailing in food e-commerce adoption, but the dynamics are changing almost daily as our customers and consumers put an increasing focus on this new channel.”
General Mills’ net income in fiscal 2017, ended May 28, totaled $1,657.5 million, equal to $2.82 per share on the common stock, down 2% from $1,697.4 million, or $2.83 per share, in fiscal 2016. Net sales also were lower, falling nearly 6% to $15,619.8 million from $16,563.1 million.
The company’s financial targets in fiscal 2018 include organic sales down between 1% and 2%, total segment operating profit ranging between flat and up 1% in constant currency, an increase in adjusted operating profit margin, and a 1% to 2% growth in constant currency adjusted diluted earnings per share.
To achieve its 2018 goals, Donal L. Mulligan, chief financial officer, said the company is targeting a higher level of media investment to support brands and innovation.
|Don Mulligan, c.f.o. of General Mills|
“We’re also investing behind capabilities like e-commerce and strategic revenue management that are critical to future growth, showing how bringing to life our e-commerce investment is creating advantage for General Mills, and we’re penetrating new geographies by bringing Yoplait to more cities in China and expanding Häagen-Dazs stick bars around the world,” he said. “Finally … we have issues under way in our H.R. and finance functions to further standardize, automate and centralize functional processes on a global basis, which in turn will take our work and improve our operating controls.
“And we’re taking the same approach to keep business processes such as go-to-market to eliminate inefficiencies in cross-functional handoffs. All these actions not only help us operate more globally while reducing costs, but importantly, it will free up our businesses to spend more time focused on consumer initiatives to drive top-line growth.”