General Mills: Baking is on trend and can boost profits
Ann Simonds, senior vice president and president of General Mills’ baking products division, made her comments in the company’s Q3, fiscal 2014 analyst earnings call on Wednesday 19.
General Mills posted a 1% dip in net sales down to $4.38bn for the quarter triggered by severe winter weather and foreign exchange headwinds, according to company CFO Don Mulligan. Despite this, net earnings for the quarter were up 3.1% on the previous year, at $411m.
Ken Powell, chairman and CEO of General Mills, said that its baking products business that included Pillsbury and Betty Crocker was a “terrific platform for sales and profit growth” in the US retail segment for General Mills. Total sales for the quarter across the platform for the quarter were up 4%.
The baking business held huge promise for General Mills with leading brands across many categories, Simonds said. For example, Betty Crocker was top in dessert mixes and Pillsbury in refrigerated baked goods, she said.
“We like the growth prospects we see for our business. Dessert mixes and refrigerated dough enjoy high household penetration rates, and people shop these categories nearly every month because baking is on trend.”
Millennials, boomers and Hispanics drive baking boom
Simonds said it was millennials, boomers and Hispanics that would fuel future growth across General Mills’ baking division.
“Millennials are a great demographic for us (…) This is a generation that is starting families, they like to cook and bake, they’re willing to try new things, and they’re also developing an interest in scratch baking,” she said.
Although she added that this group’s definition of ‘scratch baking’ involved baking mixes – products they turned to for creative inspiration.
The boomers generation had downsized but were still keen bakers, she said, so it was just important to continue developing small, multipack products for these consumers.
The growing Hispanic population in the US also presented opportunities for business, she said.
“Hispanic moms like to bake for their families, and it’s a tradition to have bread with the evening meal… We’re seeing increased household penetration for refrigerated baked goods among these consumers.”
Going digital to inspire
Simonds said the baking business aligned extremely well with digital media and communication, which had prompted widespread efforts to engage on this platform with consumers.
“Our use of digital media is growing at a strong double digit rate, and it now represents more than a third of our total media spending,” she said.
Some of the media spend had gone on smartphone and tablet apps of current digital media like Betty Crocker’s Big Red Cookbook and regular dough instruction videos for Pillsbury site visitors.