General Mills accelerates cereal and snack bars strategy to maintain COVID-driven growth

By Gill Hyslop

- Last updated on GMT

General Mills has outlined its Accelerate strategy to drive long-term growth. Pic: General Mills
General Mills has outlined its Accelerate strategy to drive long-term growth. Pic: General Mills

Related tags General Mills Breakfast cereals Snack bars coronavirus Mexican cuisine earnings report

The Cheerios maker is targeting a long-term goal of 2% to 3% growth, skewing its focus on an accelerated strategy to get there.

General Mills, like many other staple food providers, has benefited from the enforced eat-at-home trend caused by the pandemic.

It is now hoping to cement the strong profits and market share gains it made by concentrating on five product categories, including cereals and snack bars. The other three include Mexican ready-to-eat offerings, ice cream and pet food.

Jeff Harmening, General Mills’ CEO and president, unveiled the conglomerate’s new Accelerate strategy at the Consumer Analyst Group of New York conference held earlier this week (16 February).

According to a statement, the strategy “defines the path for the next chapter of General Mills growth, leveraging the company’s historical strengths and deploying them in ways that are relevant for today’s consumer and marketplace.”

It also “guides the company’s choices on how to win and where to play to drive profitable growth and top-tier shareholder returns over the long term.”

The four pillars designed to create competitive advantage

Boldly Building Brands​ by meeting consumers where they are with purpose-driven brands, supported with increasing and evolving media investment and a reinvented marketing playbook.

Relentlessly Innovating​ by creating new solutions to real consumer problems, leveraging greater speed to market on core platform innovation and finding new areas of growth through experimentation and in-market learning.

Unleashing Scale​ to create competitive advantage by investing in data and analytics to drive differential growth and efficiency across the enterprise, and by enhancing core capabilities including Holistic Margin Management, Strategic Revenue Management, and E-commerce.

Being a Force for Good​ by regenerating the planet, improving food security, strengthening communities, and advancing inclusion among the company’s people and through its brands.

Driving value

General Mills – which generated net sales of $17.6bn in FY2020 – is banking on Accelerate to result in a long-term organic sales growth of 2% to 3%, and mid- to high-single-digit adjusted earnings per share growth in constant currencies.

The company is also pushing to convert at least 95% of adjusted net earnings into free cash flow; and return approximately 80% to 90% of free cash flow to shareholders through dividends and share repurchases.

To get there, the strategy prioritises investment in eight core markets where the company already has scale and infrastructure – including the US, Canada, Australia, China, France, Brazil and India – and allocates “outsized resources and investment”​ on the five global product platforms that generated 45% of overall sales in fiscal 2020, said Harmening.

It also sees the packaged goods company plying higher investment into its top-selling brands – which represented approximately 35% of 2020 net sales in 2020 – such as Pillsbury, Annie’s, Yoplait, Tontino’s, Yoki and Kitano.

The Betty Crocker cake mixes maker said it has also planned to fast-track its media spending from mid-single-digit to high-single digits in fiscal 2021.

Future outlook

Harmening also hinted at future bolt-on acquisitions and divestitures.

General Mills said it expects the pandemic will continue to drive elevated consumer demand for food at home and reaffirmed its fiscal 2021 third-quarter and full-year financial guidance.

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