While the top-line news about General Mills may focus on its announced infrastructure review and plans to manage costs through improved efficiencies and capacity reduction, the changes taking place in its North America management structure are significant. The company recognizes the North American food and beverage industry is changing rapidly and it is trying to keep pace.
In May, Jeff Harmening was named chief operating officer of General Mills’ retail segment. David Clark now leads the Yoplait division as president. Mr. Clark changed places with Becky O’Grady, who is now in charge of the company’s international Haagen-Dazs business. Jon Nudi has moved from U.S. snacks to run General Mills’ Europe business, and his move has prompted several other moves within the company’s other divisions. Juliana Chugg is president of frozen foods; Michele Meyer is president of meals; Anton Vincent is president of snacks; and Liz Nordie is president of Small Planet Foods.
“I think what you will see is greater focus, greater prioritization, (and a) more fluid allocation of resources,” said Ken Powell, chairman and chief executive officer, in response to an analyst’s question regarding the leadership changes. “I mean it is clear that it is just more competitive out there with innovation and ideas coming from both small, very small companies and big companies. And so along with the way we focus and prioritize, it is important for us to just pick up the pace of innovation …”
Mr. Powell made his remarks in a conference call with financial analysts June 25 while discussing the company’s fiscal 2014 financial results. In fiscal 2014, General Mills generated net income of $1,824.4 million, equal to $2.90 per share on the common stock, and a 1.7% decline compared with fiscal 2013 earnings. Sales during the year rose nearly 1% to $17,909.6 million when compared with fiscal 2013.
The results were considered sluggish and the company is taking steps to reinvigorate top-line growth through innovation and cost reduction. Improved efficiencies will be the catalyst behind cost reduction and the company announced it has undertaken a strategic review of its North American operations with an eye toward capacity reduction. The company did not share details of the results of the strategic review, but Don Mulligan, c.f.o., said the company would provide an update in about 90 days.
With regard to innovation plans for fiscal 2015, the company did provide more detail and Mr. Powell noted a key driver of innovation is the changing marketplace.
“We are in changing times and we are a marketing company,” he said. “So, our job is to understand the change and capitalize on it.”
Two market changes he identified include snacking and the shifting definition of health and wellness.
“ … We are very focused on the snacking trend and it is not just the snacks in our snacks businesses,” Mr. Powell said. “We see yogurt becoming more and more of a snack food and, in fact, one of the reasons for the resurgence of our core Yoplait businesses is that we are seeing more snack usage, and we are actually talking about the product and its snack versatility in advertising.”
He added that the changing definition of health and wellness is changing, citing demand for more protein among consumers and consumer demand for the elimination of ingredients of concern from products.
New products in the pipeline that meet the changing trends include the reformulation of Yoplait Light sweetened with stevia instead of asparatame.
General Mills also plans to grow its lineup of snacks featuring protein. Two new flavors are going to be added to the Nature Valley Protein Granola line, and a new line of Cascadian Farm protein granolas will be introduced.
“We are targeting Hispanic households with the launch of Nature Valley fruteria bars featuring whole grain and visible pieces of fruit in very appealing flavors, including strawberry apple and mango strawberry,” Mr. Powell said. “And we are introducing great tasting extensions of proven franchises like coconut almond Nature Valley protein bars and blueberry Nature Valley Soft-Baked Oatmeal Squares.”
Beyond snacks and health, Mr. Powell identified four other market segments General Mills will be focusing on in 2015.
“ … Our No. 1 priority is to accelerate top-line growth,” he said. “We will do that by sharpening our consumer-first mindset with particular focus on four growing consumer groups — the growing middle class in emerging markets, U.S. multicultural families, millennials and consumers over age 55. With these growing consumer groups and our broad portfolio, there are plenty of growth opportunities and our plan is to go out and get them.”
