General Mills: U.S. retail business 'on trend'

by Eric Schroeder
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BOCA RATON, FLA. — General Mills’ U.S. retail business "is performing well" and set "to deliver continued good growth," said Ian Friendly, executive vice-president and chief operating officer for the Minneapolis-based company. Mr. Friendly presented an update on the company’s U.S. retail operations to participants at the Consumer Analyst Group of New York Conference held Feb. 17 in Boca Raton.

"Right now, our packaged food business is on trend as food expenditures in the U.S. have shifted to favor at-home meals," Mr. Friendly said. "Consumers are responding to the steady stream of bad economic news with changes in how much they spend and what they spend it on. Traffic is up at recipe web sites and down at restaurants."

As a result, Mr. Friendly said retail sales growth across General Mills’ food categories has accelerated, with especially strong growth in non-measured channels such as supercenters and club stores.

And while noting an uptick in private label sales across food and beverage, Mr. Friendly said General Mills’ brands have maintained a strong presence.

"As consumers work to stretch their food dollars, private label sales are kicking up," he said. "But private label penetration is lower in our categories than in food and beverage overall. Private label share in our category averages about 15% compared to an average of 19% across the store. And while private label is gaining share, even in our category, our brands have gained share as well.

"We have a strong portfolio of brands that hold No. 1 or No. 2 positions in their categories. These leading brands drive growth for our retail partners across the refrigerated section, the frozen aisle and the center of the store. And we are growing these brands the right way, by focusing on non-promoted baseline sales."

Going forward, Ken Powell, president and chief executive officer, said General Mills will continue to focus on five key growth drivers: product innovation, margin expansion, brand building, leading customer growth by partnering with retailers and food service operators, and international expansion.

"Generating good financial performance and returns to shareholders is our responsibility as a publicly traded company," Mr. Powell said. "But to be a top performing company that endures over time requires more than just hitting financial metrics. We also must meet the needs of a broader set of stakeholders that includes our consumers, our customers, our employees and society as a whole. Consumers count on us to provide high-quality, convenient and affordable food products. Increasingly, they also want foods that provide health benefits.

"We challenged ourselves back in 2005 to improve the health credentials of our products. We have reduced fat levels in refrigerated dough and decreased sodium levels in soups and vegetables. We’ve taken out calories and increased fiber in a whole host of products. We reached our original goal of improving 40% of our products two years ahead of schedule so we have increased our goal to improve the health profile of 45% of products by the end of our fiscal year 2010."

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