General Mills CEO wants more ‘bolt-on’ acquisitions, eyes snack bars and natural & organic foods

By Douglas Yu

- Last updated on GMT

General Mills sees the snack bar category as one of its differential growth platforms. Pic: General Mills
General Mills sees the snack bar category as one of its differential growth platforms. Pic: General Mills

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Jeff Harmening, General Mills’ CEO, told attendants at the Consumer Analyst Group of New York (CAGNY) the company could see more acquisitions as part of its ‘reshape the portfolio for growth’ strategy.

At CAGNY held earlier this week, Harmening said attractive acquisition targets for General Mills fall into three areas, including: “Bolt-on plays in existing categories in North America and Europe; business that enhance scale in emerging markets such as China, Brazil, or India; and new growth platforms where the company can leverage existing capabilities and create value.”

The US cereal giant has made several portfolio changes over the past few years, including the acquisitions of Annie’s and meat snacks brand Epic in 2015, as well as the divestiture of Green Giant in North America in 2016.

Growth platforms

Many of General Mills’ acquired brands also play an important role in the company’s “differential growth platforms”​ that Harmening hopes to accelerate in 2018.

“[We are] investing to drive differential growth on four key platforms – snack bars, Häagen-Dazs ice cream, Old El Paso Mexican food, and [our] portfolio of natural and organic food brands – that play in faster-growing categories where General Mills has leading positions,”​ he said.

According to Harmening, the natural and organic food category is valued at $41bn in North America, and General Mills is the US's third largest producer in the sector, with brands including Annie’s, Lärabar, Liberté and Cascadian Farm Organic.

Harmening added General Mills will continue to innovate its snack bar brands, including Nature Valley, Fiber One and Pillsbury.

According to Nielsen data, Natural Valley and Lärabar grew 11% and 31% respectively in US retail, while the company's snack bar sales in Europe and Australia grew 39%.

All growth platforms represented around $4bn in net sales in fiscal 2017, or 25% of General Mills' worldwide net sales, said Harmening, adding he expects them to grow at a mid-single digit rate or better over the next three years.

Fiscal 2018 targets

Don Mulligan, CFO of General Mills, said during the conference, the company’s organic net sales are expected to be “at the high end of the previous [year prior] range of flat to down 1%​.

“The company continues to see broad-based improvement in topline momentum, including in the US, where it grew Nielsen-measured retail sales by 1% and gained market share in six of its top nine categories in the latest three months through January,”​ he said.

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