General Mills optimistic on global growth prospects

by Eric Schroeder
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LONDON — General Mills, Inc. envisions “terrific growth prospects” from the five global categories of ready-to-eat cereal, super premium ice cream, convenient meals, wholesome snack bars and yogurt, said Don Mulligan, executive vice-president and chief financial officer for the Minneapolis-based company.

In a May 15 presentation at the Barclays Capital America Select Franchise Conference in London, Mr. Mulligan outlined some of those growth prospects for the five businesses, which account for more than 60% of General Mills’ worldwide sales.

The company’s newest global platform, yogurt, received a boost earlier this month when General Mills announced it would market, sell and distribute Yoplait yogurt products in Canada beginning this September. Mr. Mulligan said General Mills will consider opportunities to reacquire the Yoplait license in additional markets.

Although the United States is a developed market in an economic sense, Mr. Mulligan said it’s still a developing market for yogurt.

“In the U.S., the category’s only about 35 years old and it’s the emergence of new market segments that drives growth for the category,” he said. “Greek yogurt is the latest market entry. We see this segment bringing new users to the category, and retailers are expanding shelf space for their yogurt sections to accommodate this growth.”

He said retail sales for General Mills’ Greek yogurt are up nearly 50% year to date in measured channels, and gains are even stronger in non-measured outlets.

General Mills also remains at the top of the pack in delivering yogurts geared toward children.

“Retail sales for Go-Gurt tubes are up 14% so far this year,” he said. “In January, we introduced a line of lactose-free yogurt products, Yoplait products. Fifteen per cent of U.S. consumers are lactose intolerant and the percentage is higher among multicultural groups. As a result, dairy products that are lactose free are growing at double-digit rates.”

Mr. Mulligan also noted growth in yogurt sales in away-from-home channels, such as colleges, universities and primary schools.

Turning to super premium ice cream, Mr. Mulligan said General Mills is bringing strong innovation to markets around the world. The company earlier this year launched Secret Sensations in France and Spain, and it now is introducing the product in Germany and the United Kingdom.

“This product is ice cream on the outside with a liquid crème brulee or chocolate fondant center,” Mr. Mulligan said. “Consumer response to the product has been terrific.”

Mr. Mulligan said growth prospects for the company’s convenient meals business are solid as consumers face the daily dilemma of ‘what’s for dinner?’ New product innovation and taste-focused advertising are driving strong results in the company’s Progresso Soup business. General Mills now holds a 38% share of the ready-to-serve soup category, up from a 25% share when the business was acquired in 2002.

In China, General Mills is expanding its Wanchai Ferry brand beyond dumplings into other dim sum varieties and frozen noodles. The company also is taking the brand into new cities in China and even into other markets in Southeast Asia, Mr. Mulligan noted.

General Mills has looked to grow its wholesome snack bar business by expanding offerings in the natural and organic foods segment. To that end, sales for Larabar all-natural fruit and nut bars have grown at a 30% rate over the past two years and are up double digits so far this year, Mr. Mulligan said. He also noted the company is seeing opportunities for the Fruit Should Taste Good product line, which was acquired in February.

General Mills’ largest global business is ready-to-eat cereal, and Mr. Mulligan said the company remains bullish on the prospects for the category “because it delivers the great taste, health and convenience consumers demand at a good value.”

He said the company is driving growth “though a balanced combination of existing product renovation and new product innovation.”

Cereal consumption also is growing away from home, and General Mills intends to capture that market, Mr. Mulligan said.

“School breakfast programs are expanding in the U.S., and we expect that trend to continue,” he said. “We’re the leading cereal company in the education channel where we think our whole grain message differentiates us. Across all away-from-home occasions our cereal business has grown at a 4% rate over the past three years, and it’s up another 4% in 2012.”

Looking to fiscal 2013 and beyond, Mr. Mulligan said prospects for General Mills “are very bright.”

“Our five global product categories deliver foods that are convenient, nutritious and taste great,” he said. “Our brands hold leading positions in these large and growing global categories. So I really like the prospects for increasing our sales, earnings and market share positions in these categories in the years ahead.”

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