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General Mills spends big on Asian product development

Post a commentBy RJ Whitehead , 16-Jul-2014
Last updated on 16-Jul-2014 at 08:26 GMT

General Mills opens Shanghai development centre to boost China market

In a move to channel more investment into its growing Chinese market, food major General Mills has opened its first major technical centre outside of its Minneapolis headquarters. 

The US$15m Shanghai facility will focus on developing Chinese consumer products, including snacks, convenience meals, yogurt and super-premium ice cream, as well as product and nutrition research, food safety and sensory evaluation centres.

"Our new technical centre provides General Mills a tremendous opportunity to accelerate innovation in the Greater China region and better support this rapidly expanding business," said Ken Powell, the company’s chief executive. 

"We will increase our agility to act on emerging consumer trends, enable bigger and better innovation pipelines, and establish a food safety centre of excellence for our business."

General Mills’ local business model centres on developing regional-specific products and tastes, meaning that having the capacity for greater technical development for Far East consumers is critical, said Gary Chu, president of General Mills China.

Market on the move

Today, China is one of the company's largest growth markets, with brands such as Wanchai Ferry dim sum, Häagen-Dazs ice cream and Bugles and Trix snacks especially popular.  

Constant-current net sales for China have grown at a 15% compound rate over the past four years, reaching over US$700 million in 2014, while company also expects double-digit net sales growth from Greater China this fiscal year. 

Last week, it announced that it would expand its geographic presence for Haagen-Dazs, adding 80 new shops and entering 16 new cities in China.  The company is also preparing to enter the US$8bn yogurt category, and has begun construction on a new manufacturing facility in the region.

One-third of General Mills sales are now outside the US, representing a market worth more than US$6bn in fast-growing categories like ready-to-eat cereal, yogurt, snacks, convenience meals and super-premium ice cream.

Rise of the middle-class

The company has been focusing on middle-class consumers in emerging markets to drive faster topline growth, the company has said. Across China, Indonesia, India and Brazil, the sheer number of new middle-class households is projected to grow by almost 200m people between 2010 and 2020. 

"These consumers are increasingly pressed for time," said Chris O'Leary, General Mills’ executive vice-president for international business. 

"As a result, this emerging middle-class is looking for convenient food solutions, with strong health credentials and great taste. All of which points to a huge growth opportunity for our business going forward."

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