General Mills capturing larger share of away-from-home market

by Eric Schroeder
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General Mills developed Old El Paso Gorditas and mini Pillsbury baked goods in resealable packages for added convenience.

MINNEAPOLIS — Strong capabilities across its key platforms propelled momentum for General Mills throughout its convenience stores and food service segment, leading to a successful 2015 and setting the stage for further growth in 2016, Bethany Quam, vice-president of Convenience Stores and Foodservice, told analysts during a July 14 investor day conference.

“As U.S. consumers spend $1.4 trillion a year on food and beverages, nearly half of that is for food eaten away from home,” Ms. Quam said. “As consumer confidence has improved, food away from home has captured the increasing share of food spending.”

For its part, General Mills is focused on six key product platforms: cereal, yogurt, snacks, frozen breakfast, biscuits, and baking mixes. The six platforms combined generate almost $1 billion in sales, or nearly half of total segment sales, and account for more than two-thirds of segment operating profit, Ms. Quam said.

She said frozen breakfast products stand out has a great example of a platform General Mills has used to meet a specific consumer need.

“We developed this Pillsbury branded line five years ago for school food service operators who wanted an easy and convenient way to serve breakfast that kids could eat right in the classroom,” Ms. Quam said. “Sales have grown at a strong double-digit compound rate and we have added new varieties of heat-and-eat breakfast baked goods, including new cream cheese filled mini bagels that launched this spring.

General Mills introduced new cream cheese filled mini bagels this spring.

“We are now bringing this heat-and-serve convenience to school lunch with Old El Paso Gorditas. They heat right in the package, so it is an easy way to serve a hot lunch with little mess. Five billion lunches are served in schools annually. That is more than twice the number of school breakfasts, so we see great opportunity to expand this line.”

In cereal, the ready-to-eat category is growing at a low single-digit pace in non-commercial food service outlets, while granola has turned into a “big business,” Ms. Quam said.

“Sales for our bulk granola have grown nearly 30% compounded over the past three years,” she said. “Our granola brands are particularly popular on college campuses and many food service operators include it as a key ingredient in yogurt parfaits, baked goods and snack mixes. So, we like our growth opportunities for cereal.”

General Mills continues to expand its snacks lineup across the convenience store channel. Ms. Quam said the company’s snacks sales in those outlets have been growing at an 8% compound rate. Later this year, the company plans to introduce Nature Valley Simple Nut Bars made with whole nuts and seeds, a chili dark chocolate granola bar, and Chex Mix Xtreme snacks in chili and lime and sriracha flavors.

Ms. Quam also said General Mills is ramping up its participation in the $2 billion packaged bakery section in convenience stores.

Bethany Quam, vice-president of Convenience Stores and Foodservice.

“This is by far the biggest C-store category that we compete in today,” she said. “We launched a line of Pillsbury mini baked goods in resealable containers at 7-Eleven with great success. We are now expanding to additional C-store chains. We are also adding two Danish varieties to the line. These sweet snacks are great for breakfast, and we see them extending into afternoon snacking as well.”

General Mills has found success with its yogurt business behind the strength of the Yoplait brand. Ms. Quam said Yoplait yogurt works well across all food service channels, both at the front of the house branded offering and in the back of the house where it may be used as an ingredient. She said General Mills has sold more than 200 million tubes of GoGurt since making Yoplait GoGurt an option in McDonald’s Happy Meals in 14,000 outlets last summer.
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