General Mills Continues Innovation Despite Weak Q3 Figures

By Karla Paris

The maker of brands such as Cheerios, Yoplait, and Betty Crocker recently issued its profit predictions for Q3 and the prediction is lower-than-expected.  But don’t count General-Mills out yet

General Mills is one of the largest and most diversified food and snack companies in the world, so it does have a little wiggle room for declines in one product segment or region.  Chairman and CEO Ken Powell says, "This year's severe winter weather dampened sales performance across the food industry, and third-quarter results for our U.S. retail and convenience stores and food service segments reflect that disruption. International segment results were stronger, with constant-currency sales gains in every region including double-digit growth in both Asia-Pacific and Latin America."

With sales booming in the snack industry General Mills’ Nature Valley and Fiber One bar lines are helping pick up its losses, as the snack side of General Mills showed a 10 percent increase in sales in Q1.  While the U.S. snacks and cereals industry is at a mature stage, General Mills is turning its sights internationally and is looking to expand in the emerging regions to enhance its market presence.

Regions where General Mills sees an opportunity include:

• India, Indonesia, the Middle East, and North Africa — General Mills is looking to integrate and expand its simple meals, ice cream, yogurt, and/or snack product lines into these regions
• China — which General Mills has already begun infiltrating as it started building its new Yoplait facility in December of last year. General Mills is working with a French dairy cooperative which co-owns Yoplait to aid in supply for the China and Pacific market

Separate, and apart from its expansion in terms of geographic reach, General Mills is still set to bring an aggressive line of new products to consumers during the second half of 2014. The cereal industry overall, has been affected by a lack of new ideas — marketing campaigns and product lines —and General Mills is hoping to change that.   Many of the General Mills’ 50 new items were generated from the company’s “Innovation Intersection” program.  The “Innovation Intersection” program connects General Mills R&D employees with inventors, academics, entrepreneurs, suppliers, customers, and consumers throughout the product innovation process.

Through this initiative, General Mills goes beyond new product development and includes everything from adding health benefits to products, boosting the company's environmental sustainability efforts, finding new ways to connect iconic brands with today's on-the-go consumers, partnering with retail customers, and improving its corporate productivity.

Looking ahead, General Mills says it continues to anticipate strong double-digit growth in fourth-quarter adjusted earnings per share. Additionally, quarterly input cost inflation is expected to be well below year-ago levels.