General Mills optimistic about 2011 growth prospects

by Eric Schroeder
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NEW YORK — Noting it’s a “dynamic time to be in the food business,” Ian Friendly, executive vice-president, chief operating officer of the U.S. Retail business at General Mills, Inc., told analysts at the Morgan Stanley Consumer & Retail Conference in New York on Nov. 17 that the Minneapolis-based company likes its growth prospects for 2011 and beyond.

The optimistic outlook comes about a month before General Mills will release its second-quarter financial results, which Mr. Friendly indicated will be “generally in line with and not ahead of year-ago levels” when they are released on Dec. 16.

Among the reasons for Mr. Friendly’s optimism is consumer trends point to continued growth in meals eaten at home.

“The consumer trends toward eating more meals at home actually began back in 2003, well before the recession, and the trend is expected to continue for at least the next several years, driven by economic factors and the presence of both older consumers and new millennial families,” Mr. Friendly said. “Total U.S. food expenditures top $1 trillion annually, so this shift to meals at home is a significant opportunity for our U.S. retail business.”

Innovation, too, is expected to be a driving force, he said.

Mr. Friendly said General Mills has received a boost from the recent launches of Chocolate Cheerios and Wheaties FUEL, and in January 2011 the company will debut a new national television and digital campaign behind the company’s whole grain cereal lineup. A new cereal — Cinnamon Burst Cheerios — also is set to hit the market in January, providing 20% of the daily recommended value of fiber.

Beyond cereal, the company’s Progresso soup line is positioned to achieve renewed sales growth in fiscal 2011, due in no small part to product innovation.

“Four new Mexican-inspired World Recipe soups and a reduced-calorie version of our popular New England Clam Chowder are turning well,” Mr. Friendly said. “We are highlighting 18 of our soups that are gluten-free, and we have added new varieties to our reduced sodium and high fiber line.”

In the yogurt category, innovation such as portability and health and wellness have helped double the category’s size over the past nine years, Mr. Friendly said, and the latest driver of growth looks to be Greek-style yogurts.

“Back in January we launched four flavors of Yoplait Greek yogurt, and this line is growing nicely,” he said. “We are a small player in the Greek segment at this stage, as the sales growth to date has been led by regional yogurt manufacturers. But we are ramping up our support for this business in calendar 2011.”

In the freezer case, the company’s Yoplait Smoothie product is expected to generate $75 million in all-channel sales in fiscal 2011, while Green Giant Healthy Colors vegetables are expected to generate $30 million in sales.

“We’ve got good levels of innovation working in the market for us today with plans for additional product news in the second half of the year,” Mr. Friendly said.

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