BOCA RATON, FLA. — General Mills anticipates U.S. sales of natural and organic food and beverage products will reach $1 billion by fiscal 2019, a year ahead of the company’s previously announced goal of fiscal 2020. With fiscal 2015 sales of natural and organic products currently reaching approximately $675 million, company executives anticipate investments in such businesses as Epic Provisions and expansion of the Annie’s brand into new categories will support the forecasted sales growth.
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| Jeff Harmening, executive v.p. and c.o.o. of General Mills’ U.S. Retail business unit |
“That is without additional acquisitions,” said Jeff Harmening, executive vice-president and chief operating officer of General Mills’ U.S. Retail business unit, Feb. 16 during a presentation at the Consumer Analyst Group of New York conference taking place in Florida.
The news comes at a time when General Mills is in the process of reshaping its product portfolio with an eye toward faster growing opportunities, said Ken Powell, chairman and chief executive officer. He added that the U.S. consumer is changing, increasing demand for products perceived as natural and organic, and that will create opportunities going forward for the company.
“We are seeing consumer interest continue to grow,” he said. “We are also seeing points of distribution more widely available across a variety of retailers, which is another tailwind.”
In October 2014, General Mills finalized its acquisition of Annie’s for approximately $821 million. At that time the business was generating approximately $200 million in revenue, said Mr. Harmening, and today sales are closer to $300 million.
“What we have through Annie’s is a tremendous growth portfolio,” Mr. Harmening said in a follow-up interview with Food Business News. “In addition to the categories the company was already in, we see growth opportunities in additional categories like soups, cereals and yogurt.”
Chris O’Leary, executive vice-president and c.o.o. of General Mills’ International business, said the brand may also “travel well.”
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| Chris O’Leary, executive v.p. and c.o.o. of General Mills’ International business |
“We are expanding it to Canada and evaluating it for Europe,” he said.
Annie’s is not the only natural or organic brand within the General Mills portfolio, but Mr. Harmening said it is specially “positioned with gatekeeper mom.”
“Because of that it has an incremental place in our portfolio,” he said. “It has a nice fit that is differentiated.”
Another growth opportunity appears to be meat snacks. On Jan. 6, General Mills acquired Epic Provisions, a meat snacks company that makes bars that are sold nationally in such retailers as Whole Foods Market, Sprouts Farmers Market and Natural Grocers.
“Epic is a small business now, but it has tremendous growth potential,” Mr. Harmening said. “It puts us within the meat snacks category and plays well, because it is a snack and features protein, both of which are on trend.”
This past year General Mills launched 301 Inc., a business development venture capital firm designed to work with food and beverage industry startups. Mr. Harmening said it was through 301 Inc. that General Mills came into contact with Epic Provisions and eventually led to the acquisition.
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| Ken Powell, chairman and c.e.o. of General Mills |
Mr. Powell said the development of 301 Inc. was in response to the increase of startups in the marketplace.
“It’s very important we have a way of seeing this explosion of activity at an earlier stage,” he said. “Whereas in the past we may have been looking for a particular sales threshold, today it’s good to see it earlier and see where it’s turning off the shelf. That is an early indication of the power of an idea. It gives us the ability to see the little jewels, to see those businesses with real potential.”
