NEW YORK — While fiscal 2019 was a successful year for General Mills, Inc.’s U.S. cereals business, it was a challenging year for U.S. snacks, Jonathon J. Nudi, group president of North America Retail, told participants during a July 9 Investor Day conference. Both businesses have room for improvement, he said.
In the case of cereal, Mr. Nudi said General Mills expanded its share leadership position and saw the category improve throughout the fiscal year. General Mills grew its retail cereal sales for the second year in a row, he added.
“We led the category in innovation, brought strong consumer news and marketing to our brands and improved our in-store execution over the course of the year,” Mr. Nudi said. “We believe there is room for more growth in the category driven not only by our efforts but also by changing consumer demographics. After several years of declines, the population of children in the U.S. is expected to increase over the next few years according to U.S. Census projections. And the number of adults aged 55 and over continues to grow rapidly. These two age groups also happen to be the ones with some of the highest levels of per capita cereal consumption. Our opportuny is to drive further category improvement by engaging with these consumers and providing them the great-tasting, convenient, nutritious cereal brands that they love.”
Mr. Nudi said General Mills has tailored its brand-building efforts to reach the changing demographics.
“We’re introducing refreshed heart-healthy messaging on Honey Nut Cheerios this year to clearly communicate the health benefits of this product to boomers, who we know are increasingly seeking brands that they know and love that also meet a certain health profile,” he explained. “And we’re continuing our terrific partnership with Ellen DeGeneres to drive another 1 million ‘acts of good’ across the country, reaching 5 million acts of good to date. On Cinnamon Toast Crunch, our plans will focus on (extraordinary) taste by delivering permissible fun across our full product line, including last year’s successful Cinnamon Toast Crunch Churros launch.
“On Reese’s Puffs, we’ll feature our ‘It’s what you really want’ campaign. We also recently unveiled a one-of-a-kind influencer collaboration with musician, artist and fashion icon, Travis Scott, who designed an exclusive Reese’s Puffs box. We sold these limited-edition boxes online at $50 per box, and they sold out in 30 seconds. Breaking through with younger consumers means connecting with them where they are, and partnerships like this can give our brands powerful relevance.”
General Mills will continue to follow through with similar events and partnerships in fiscal 2020, Mr. Nudi said. The company is partnering with “The Lion King” to offer on-pack promotions and in-store displays featuring the upcoming movie on brands such as Cheerios, Reese’s Puffs and Cinnamon Toast Crunch.
In addition to events, General Mills also has a slate of new innovation planned for its cereals lineup, including Blueberry Cheerios and Peanut Butter Chex. The company also will roll out Morning Summit, which Mr. Nudi described as “a new premium, hearty cereal with flakes, fruits and nuts, including almonds as the first ingredient.” He said the cereal will retail for approximately $13 per 38-oz box.
“With cereal plans built out on these big growth ideas and strong fundamentals, I’m optimistic about our outlook for the year ahead,” he said.
Turning to U.S. snacks, Mr. Nudi said General Mills’ long track record of growth in the business came to a halt in fiscal 2019 as the company faced challenges, especially in its snack bars business, which accounts for about 60% of the unit’s retail sales.
Nature Valley’s performance in fiscal 2019 fell short of expectations, he said, primarily due to less impactful innovation and lower levels of merchandising. Mr. Nudi said General Mills plans to address both areas of the brand’s shortfalls in fiscal 2020.
“While Nature Valley has a long history of successful innovation, performance in our more recent launches has been mixed,” he said. “We’re getting back to innovation on the core bar in fiscal ‘20 with a new line of crispy creamy wafer bars. These new bars are made with light and crispy whole grain wafers, layers of peanut butter and crunchy granola topping, providing a differentiated texture experience for consumers. It’s still early, but wafer bars are off to a good start with strong display in consumer support plans on tap for the summer and fall.”
On the merchandising front, General Mills plans to focus on securing key merchandising windows and improving in-store displays for Nature Valley, Mr. Nudi said.
“One way we’ll do that is by leveraging our scale and partnering with Big G cereals to offer high-value Box Tops promotions during the back-to-school season,” he said. “In addition to improving our innovation and in-store execution, we’ll increase brand-building support of Nature Valley in fiscal ‘20 behind the crunchy and sweet and salty product lines. We’ll invest in our ‘We are better outside’ campaign, focused on helping Nature Valley consumers get outside more often to receive the health benefits of nature.”
Mr. Nudi said General Mills also has established a focused improvement plan for its One franchise. After several years in which Fiber One “fell out of step” with many weight management programs, Mr. Nudi said General Mills is taking the brand back to its roots. He said the brand’s weight management credentials have been improved thanks to an initiative to renovate 75% of the line to reduce the calorie count, sugar and net carbohydrates.
“We think this change coupled with the right-sized distribution on shelf will help stabilize the brand,” he said.
Elsewhere in the One franchise, Mr. Nudi said General Mills has seen early success from Protein One, a line of bars featuring high protein and low sugar with 90 calories. He said the company is supporting the brand through a partnership with “The Bachelorette” to build trial and awareness.
Beyond its Nature Valley and One brands, General Mills has plans to continue its growth trends in other parts of its snack bar portfolio.
“On Epic, we’ll continue to broaden availability for Epic Performance Bars, a high-protein offering made from cage-free egg whites and just five to six simple ingredients,” he said. “And we’ll expand our Epic Meat Bar product line with two new Rise & Grind Bars in bacon, pork and egg yolk as well as chicken, egg yolk and apple varieties that provide a delicious high-protein, on-the-go breakfast option. On Lärabar, we’ll support the brand through messaging, partnerships and in-store events. And we’ll ramp up distribution for new Lärabar Protein Bars, which are gluten-free, vegan and non-G.M.O. and deliver 11 grams of plant-based protein with just 8 or fewer ingredients. And on treat bars, we’ll build off significant growth in fiscal ‘19 with the launch of a new Honey Nut Cheerios treat bar. We’ll also execute cross-category merchandising and events such as our upcoming Unicorn event featuring Lucky Charms cereal and treat bars.”
Despite the challenges, Mr. Nudi said General Mills remains upbeat about its plans for U.S. snacks.
“While there’s hard work ahead of us, we have the right people and the right plans in place, and we expect to continue to improve our performance in fiscal ’20,” he said.