General Mills: New Nature Valley protein bars will be as big as Fiber One brownies in year one
Speaking on a call with analysts about the firm’s first quarter results in fiscal 2013, US snacks division president Jon Nudi said recent launches in the grain snacks segment had been a big hit with consumers.
Fiber One 90 calorie brownies had generated more than $100m in retail sales in their first year, he said, while new Nature Valley protein bars, which contain 10g of protein per bar, “contributed double-digit retail sales growth for the brand in fiscal 2012, and are on track to be as big as Fiber One Brownies in year one retail sales”.
From mindless munching to healthier snacking
He added: “There has been a lot of investor interest in snacks lately. US consumers are snacking more than ever.
“[But] instead of mindless munching, consumers are increasingly looking for [snacking] options that provide real nutritional benefits, so it’s no wonder that better for you snacks are the fastest growing segment in the category.
“Retail sales in this [better for you snacking] category grew 6% in fiscal 2012 to reach nearly $30bn and we see plenty of room for continued growth.
“Today, the grain snack bar category generates $3bn in retail sales and it’s growing at a 5% annual rate. Our sales are well outpacing the category driving solid market share gains for us.
“Our dollar share of the category has increased 10 points over the past five years [to about 35%].”
Growth has been particularly strong in nontraditional stores, with General Mills’ snacks volumes up 8% in club stores and 9% in dollar stores last year, he said.
US category volume trends are gradually improving as pricing moderates
While overall pound volumes in the US retail business were down 2% in the first quarter, US category volume trends are gradually improving as pricing moderates, even though they are still in negative territory, said chief executive Ken Powell.
“As we continue to see these consumer prices moderate, we do expect our volume to improve continuously over the course of the year. So we are expecting that broadly across the portfolio.
“We have a number of new products that we're going to be launching, as you know, and the early returns on those is that they're going to be good contributors. So we are expecting our volume in sales trends to improve somewhat in US retail over the course of the year.”
As for cost inflation, he said: “We still expect inflation in 2013, but at a rate well below the 10% rate we saw in 2012, so we do anticipate a more stable food price environment for consumers.”
Frozen pizza category sales down 4% in year to August 25
Showing a graph containing Nielsen xAOC data (expanded all outlets combined) for the 12 months to August 25, 2012, Powell noted that most categories in which General Mills has a leading presence are growing with the exception of frozen pizza.
- Refrigerated yogurt +9%
- Grain snacks +5%
- Frozen hot snacks +5%
- Dry packaged dinners +5%
- Frozen veg +2%
- RTE cereal +1%
- Wet soup +1%
- Mexican aisle products +1%
- Refrigerated baked goods/dough +1%
- Frozen pizza -4%
Strongest performers: Grain snacks and new Progresso Recipe Starters
Products making the strongest contributions to net sales growth in the first quarter (three months to August 26) included Apple Cinnamon Chex and Fiber One Nutty Clusters & Almonds cereals, Nature Valley Protein Bars, Green Giant Seasoned Steamers vegetables, and Progresso Recipe Starters cooking sauces.
Q1 net sales in US retail were down 1% to $2.49bn; with sales growth in snacks, baking products, meals and the Small Planet Foods division, but sales declines for Big G, Frozen Foods and Yoplait.
Q1 net sales for the consolidated international businesses grew 27% to $1.09bn, while net sales for the Bakeries and Foodservice segment were down 2% to $472m.
Powell said: “In our core U.S. market, we are seeing slow improvement in price and volume trends across our retail food categories.
“As we move into the second quarter, we’ll be putting full advertising support behind our new items, and we have planned strong levels of in-store merchandising across our product categories.”
Click here to read what General Mills had to say about ready to eat cereals at the Barclays Back to Schoool conference.
Click here to read what General Mills thinks about overcapacity in Greek yogurt.
