During a year when six in 10 (61.8%) manufacturers reported having at least one SKU dropped in favor of a private label, General Mills Chairman and Chief Executive Officer Kendall Powell appears to have been eating his Wheaties.
Under his watch, the maker of Big G cereals, Fiber One bars and Yoplait Delights not only remained relevant, but actually increased its retail distribution thanks to new product innovations.
“The number of General Mills items in the average grocery store increased for a second straight year,” Powell said.
Among items winning placement were Green Giant Valley Fresh Steamers, which raked in $84 million in year-one sales in 2009, placing it in the top five of the most successful new brands, according to SymphonyIRI Group. Brand extensions like Chocolate Cheerios and Wheaties Fuel helped drive a 5% increase in Big G cereal sales, and items like Wanchai Ferry frozen entrees and Yoplait Smoothies brought in $50 million each across retail channels.
“We’ve maintained our level of new product activity, and this year’s line-up performed very well,” noted Powell.
Part of the success can be attributed to the popularity of the categories in which General Mills competes. Over the last 52 weeks, these segments have grown more than two times faster than food and beverage categories in total, Powell said. Strategic spending has also played a role.
A continued focus on Holistic Margin Management allows the Minneapolis-based company to invest supply chain savings in its brands.
“[HMM] has helped us offset periods of significantly higher input costs, helping us protect our margins and keep our brands affordable for consumers in this economic environment,” Powell said.
A recent opportunity came during the holiday period when the food maker wanted to increase Chex Mix advertising and communicate that its Rice Chex cereal is gluten-free.
“The challenge was to identify a savings opportunity that didn’t impact the great taste and quality consumers love,” Powell said.
A cross-functional HMM team with representatives from research and development, marketing and sourcing identified potential savings in the cost to transport rice to General Mills’ plant. The company switched to a new supplier that delivers the same quality product for significantly less due to its proximity. A portion of the savings went to advertising for Chex.
“That contributed to retail sales growth of 7% on Chex through our first three quarters of [fiscal] 2010, and will deliver significant annual cost savings for the brand.”
It will also move General Mills closer to its goal of $1 billion in savings through HMM over the next three years and $4 billion over the next decade.
Part of the money will be invested in new product innovations. Planned for the coming year are 80-calories-per-serving Natural Valley granola thins in dark chocolate and peanut butter; a new line of refrigerated desserts called Pillsbury Sweet Moments; and Pillsbury Simply bread and biscuits with ingredients made to resemble those of a scratch recipe.
Products geared toward Baby Boomers and multicultural demographics will also be developed, and healthy reformulations are likewise under way.
In December, General Mills announced that it would further reduce sugar in cereal to single-digit levels of grams per serving, in all cereals advertised to kids. It’s also working to reduce sodium in 600 SKUs over five years. It will cut salt by 20% across multiple categories.