BOSTON — Despite expectations that the global operating environment will remain challenging in 2010, Minneapolis-based General Mills, Inc. still expects to achieve good growth behind strong brands, a companywide focus on holistic margin management, increased marketing support and excellent performance from manufacturing plants.
"We work hard to protect our margins and keep our business healthy," said Don Mulligan, executive vice-president and chief financial officer for General Mills, during a Sept. 10 presentation at the Barclays Capital Back-to-School Conference in Boston. "And we’ll innovate throughout the organization, particularly to drive top-line growth with products that meet consumer needs."
In focusing his presentation on innovation, Mr. Mulligan said new products are a key tool, and General Mills is working to make those tools more productive.
"A few years ago, we set a goal to launch more differentiated and more sustainable new items," he said. "We target new products that are margin accretive or neutral, and we focus on items that bring new users into the category or expand a product line to new usage occasions, and we are targeting bigger ideas."
Progresso Light soups, Fiber One bars and Banana Nut Cheerios were a few of the products Mr. Mulligan singled out as "great wins" for General Mills over the past year. That innovation is expected to continue in 2010 with the debut of new items such as Total Blueberry Pomegranate and Cookie Crisp Sprinkles, as well as the introduction of additional gluten-free Chex cereals.
"Our goal is to lead growth through innovation, driving sales increases for our categories," he said. "When we do that well, it results in share growth for our brands. We won’t grow our share every year, but we’ve been able to steadily grow our share of the cereal category sales over time at an average of 30 basis points per year over the last 25 years. Our goal is to keep innovating and keep building our brands in the U.S. cereal category in the years ahead."
In addition to its Big G cereal business, General Mills has been innovative in its Betty Crocker portfolio as well, Mr. Mulligan said. The brand is sold in 15 markets outside the United States and generates more than $1 billion in annual sales. This past summer the brand received a boost from the launch of gluten-free baking mixes.
"Not everyone needs to avoid gluten, but for consumers that do, these new desserts are great news," Mr. Mulligan said. "In the first two months, we received 32,000 inquiries about where our gluten-free products could be purchased. That is roughly three times our normal rate. Our digital marketing strategy fits perfectly with this narrow but very focused consumer base."
Grain snacks also are gaining momentum at General Mills as the company enters 2010. In addition to the success of Fiber One and Nature Valley bars to the at-home market, General Mills has benefited from a 20% increase in grain snack sales to food service channels. New cereal bars with a full serving of whole grain developed specifically for school cafeterias has combined with unique products such as Golden Graham Treats and Cinnamon Toast Crunch Treats to give General Mills a boost in the food service channel, Mr. Mulligan said.