The business – owner of brands including Cheerios, Nature Valley and Annie’s - said it has a “significant opportunity” to grow the number of stores carrying its natural and organic brands, and the number of stock-keeping units (SKUs) they stock.
General Mills made the statement this week at an investor day event in New York, when it said it was on track to hit $1bn in sales from its natural and organic portfolio, which also includes Lärabar and the Epic Provisions meats snacks brand acquired this year.
Sales from the company’s natural and organic portfolio have grown at a compound annual growth rate of 18% since 2000, when they were worth $50m. Sales from the portfolio were $750m in the company’s latest fiscal year, which ended in May.
The business has identified 100 ‘priority’ natural and organic SKUs that it believes should be on the shelf of mainstream retailers, and has found that stores typically carry just 33 of them – including, on average, 13 Annie’s lines, nine Cascadian Farm and five Lärabar.
Key focus for year
Expanding distribution of these key SKUs will be a focus for the business in the coming financial year, said Jeff Harmening, who was last month promoted from chief operating officer of its US Retail segment to COO of the overall General Mills business.
“We have significant opportunities to increase the number of stores carrying our natural organic brands and the number of SKUs they carry,” he added.
The company is also looking to grow sales by expanding the natural and organic portfolio through innovation including relaunching the Annie’s granola bars with three new flavors designed to appeal to kids, and the launch of Annie’s refrigerated baked goods (see box-out below).
Another focus of the business in 2017 is snack bars, with the company rolling out a new, cleaner look for Nature Valley that it said would reinforce the simplicity of the brand and make it easier for consumers to shop what it described as the “cluttered” snack bar aisle.
General Mills is also launching Nature Valley nut and seed bars, and the new Backpackers snacks geared to kids.
General Mills targets ecommerce dollar
General Mills is making a major push for share of the ecommerce retail market, which it said currently represents about 1.5% of US food sales but is expected to be 5% by 2020.
Amazon Fresh and click and pick efforts by major retailers such as Walmart and Kroger had led a transformation in ecommerce, said General Mills president of sales & channel development Shawn O’Grady.
“Ecommerce growth is being driven by the transition from spear-fishing for hard to find items to complete full basket shopping,” he added.
General Mills is looking to capitalize on the trend with a dedicated ecommerce team focused in honing its online offer through online content management, precision targeting, web analytics and shopper insights across foods.
“Backpackers will build on the successful launch of kid-friendly Nature Valley bars in Canada last year,” said Harmening.
The Lärabar brand is being expanded into the ‘bites’ market following the launch of the brand’s first TV ad, which contributed to 19% year on year value sales growth in fiscal 2016 [Nielsen].
General Mills said it was hoping to benefit from changes to the way snack bars are merchandised in store, with retailers beginning to merge the nutrition bar aisle from the pharmacy section into the grain bars in the center of the store.
“Where we see those merge we are seeing category growth double from 3% to 6%, which is great news for General Mills because we are the category leader with an almost 30% share of the combined category,” said Shawn O’Grady, president of sales & channel development.
The company is also looking at merchandising to help grow its cereals sales, and that it would aim to grow featured display for its cereals across all channels. Currently, said the company, the ready to eat cereal category’s share of display is 25% lower than its share of food dollars.
“Cereal can and will grow with the right combination of news, support and execution,” said O’Grady, “And one way we can help drive sales for our customers is helping them to better display cereal.”
He stated that cereal is three and a half times more productive on display than typical food and beverage products, adding, “When cereal gets on display it's good for the retailer and manufacturer.”
General Mills said it had driven cereal display in fiscal 2016 by focusing on getting the “biggest brands in biggest display events” rather than focussing high-frequency activity on lower impact merchandising.
Its cereal sales were up 2.8% year on year in the last quarter of fiscal 2016, and the company said it had benefitted from the success of gluten-free Cheerios and from making seven of its cereals free from artificial colors and flavors.
“We are very pleased with trends in the cereal category and are building on this momentum with more innovation and renovation in 2017,” said Harmening.
This includes making two more Cheerios varieties – Chocolate and Fruity - free from gluten this summer, and removing artificial colors and flavors from more cereals.
The business has also just rolled out new cereal brand Tiny Toast, and said it was supporting its cereals activity with marketing spend that included 40% digital, up from 25% in fiscal 2016.
In addition to rolling out the new Annie’s goods, General Mills is revamping its Pilsbury refrigerated baked goods offer with the launch of new stand-up packaging and shelf-ready cases that it said would enable it to “revolutionize” the fixture.
“These will be easier for retailers to stock and for consumers to shop,” said O’Grady.
The company is also reducing the complexity of its offer by cutting the number of items in distribution by a third as part of efforts to lower and optimize commercial spend.
It said that, in tests, this had resulted in better growth and returns.
General Mills unveils new products
General Mills is targeting key consumer trends including wellness, convenience and snacking with a raft of NPD rolling out over the coming months.
Demands such as a simple ingredient lists, no artificial colors and flavors, free from gluten, less sugar, less sodium and convenience had translated into a “very a clear set of growth opportunities for us," said General Mills chairman and chief executive officer.
The new products – some of which have previously been announced or were mentioned in the company’s full-year results earlier this month – include:
Nature Valley Chocolate Oat Bites: Baked cereal squares with chocolate chunks and a sweet drizzle. They contain 10g of protein with milk and nearly half the daily value of whole grains.
Tiny Toast: On shelf now, the first new General Mills cereal brand in 15 years comprises toast-shaped cereal in strawberry and blueberry flavors. Tiny Toast contains 9g of sugar per serving and has no artificial colors, flavors or sweeteners.
Totino's Pizza Sticks: Similar to a pizza roll, but larger, individually wrapped sticks can be heated in a microwave in 60 seconds and a “perfect” on-the-go snack, said General Mills. They are available in Pepperoni and Cheese varieties.
Nature Valley Nut & Seed Crunchy Granola Bars: Containing whole nuts, seeds, honey, tapioca syrup and sea salt, these naturally gluten-free bars are available in two varieties: Almond, Cashew & Sea Salt; and Roasted Peanut & Honey.
Nature Valley Backpacker: These chewy oatmeal bites bring together “fun flavor and wholesome ingredients,” said General Mills, and will launch in two flavors: Chocolate Chip and S'mores.
Lärabar Bites: These truffle-like bites are made from five or six simple ingredients, said General Mills, and are gluten free, non-GMO, vegan, dairy free, Kosher and made with Fair Trade Certified ingredients. They are available in Chocolate Macaroon, Mint Chocolate Truffle, Double Chocolate Brownie and Cherry Chocolate Chip flavors.
Annie's Refrigerated Dough: General Mills is launching a range of refrigerated organic sweet treats including Cinnamon Rolls, Crescent Rolls, Flaky Biscuits, Chocolate Chunk Cookies and Vanilla Sugar Cookies. They are made with unbleached flour and have no artificial flavors, synthetic colors, preservatives, hydrogenated oils or high-fructose corn syrup.