“Our strategy of focusing on the highest margin products and the fastest-growing channels is working,” said Dave Dudick, senior vice-president and president of the segment, during a March 20 call with financial analysts to discuss third-quarter earnings.
The company identified its six most profitable product platforms in the division: snacks, cereal, frozen breakfast items, yogurt, biscuits and baking mixes.
“In the education channel, the K-12 breakfast occasion is expected to grow at double the overall channel growth rate of 2%,” Mr. Dudick said. “And on colleges and universities, the collective purchasing power of students is $76 billion and rising.”
New whole-grain requirements for school nutrition programs represent a growth opportunity for General Mills, which leads the cereal category in that channel.
“Since all of our Big G cereals contain more whole grain than any other single ingredient, we have a great opportunity to expand our cereal distribution in the education channel,” Mr. Dudick said. “The recommendation of more whole grains is good for our K-12 frozen breakfast business, too. Our Pillsbury branded waffles, pancakes and French toast are each an excellent source of whole grain with 16 to 24 grams per serving.”
General Mills has increased its snack distribution in convenience stores, where food products are becoming “an increasingly important contributor to channel sales,” as gasoline and tobacco sales decline, Mr. Dudick said.
“Our Nature Valley Oats ‘n Honey Bar is the top turning grain snack bar in the entire convenience store channel,” he said. “And we’ve just launched a great new product lineup in January including Nature Valley protein bars and a new Chex Mix variety.”
For the healthcare channel, also projected to grow ahead of the industry pace, General Mills has expanded its yogurt platform with the recent introduction of Yoplait Greek 100.
For the quarter ended Feb. 24, the Bakeries and Foodservice segment had an operating profit of $75.4 million, up 13% from $66.5 million during the same quarter of the previous year. The segment had sales of $469.9 million, up slightly from $469.4 million during the same quarter of the previous year.
“We remain on track to deliver our targets for 2013, including segment operating profit growth at a mid-single-digit rate or better and another year of solid double-digit operating profit margin,” Mr. Dudick said. “And we see excellent growth prospects in 2014 and beyond.”
