General Mills Inc. (NYSE: GIS) is embarking on a new plan to increase profitability for the business. CEO Jeff Harmening detailed the plan at the annual Consumer Analyst Group of New York (CAGNY) investor conference. According to Harmening, General Mills plans to push sales higher by “launching compelling innovation that offers taste, convenience and health benefits, while investing in brand building that engages consumers and gives them another reason to walk down the aisle.”
General Mills plans to invest heavily in branding and innovation in cereal, yogurt, and snack bars in the coming quarters. The three categories have faced significant challenges over the past few years, the most severe of which has been declining sales. Cereal consumption in the U.S. declined about 2.7 percent year-over-year from 2013 to 2018, while yogurt sales have fallen from nearly $9 billion in 2015 to about $8.2 billion in 2019. Snack bar sales have also fallen.
One innovation in the cereal space is a new Morning Summit cereal that targets health-conscious consumers. Launched in late 2019, it is made with simple and “clean” foods, including almonds, dried cherries, dried cranberries, and pumpkin seeds amongst the cereal flakes. The new cereal retails for $13 at Costco, which has an exclusive deal with General Mills. Third-party sellers are charging substantially more, with Walmart listing the cereal at $26.27 per box online and Amazon listing it for $24.86 a box.
General Mills says that it remains on track to deliver its fiscal 2020 guidance despite the impact of the coronavirus outbreak in China. The company has temporarily closed nearly half of its company-owned Haagen-Daz shops in Greater China and severely restricted the hours of the other half. The shops represent 40 percent of net sales in the Greater China region, while the region represents 4 percent of General Mills net sales.