Jonathan J. Nudi, group president of North American Retail, called fiscal 2017 a “tough year” for the business unit, experiencing challenges in its yogurt business and being affected by a reduction of investments in some seasonal endeavors.

Jon Nudi, General Mills
Jon Nudi, group president-North American Retail, General Mills Inc.

“… We’re realistic that trends take a lot of turn, so we’re not planning for a meaningful pickup in our categories in fiscal ‘18,” he said. “However, we certainly expect our performance will improve this year behind better execution, strong consumer investment and compelling news on our biggest brands.”

Business unit goals for 2018 call for a 2 percent to 3 percent decline in organic net sales and improved operating margins during the year.

 General Mills yogurt products

General Mills is implementing plans to reshape the company US yogurt portfolio.

“In fiscal ‘18, we’re focused on the following key priorities for our segment: improve our performance in US cereal; reshape our US yogurt portfolio; differentially grow our snack bars, hot snacks and Mexican food businesses; invest in key foundation brands to drive sustainable profit growth; and continue to rapidly grow our natural and organic portfolio,” Nudi said.

A focus on wellness and taste are seen as key points of emphasis to drive growth in cereal sales. In yogurt, plans are under way to reshape General Mills’ US yogurt portfolio.

“We helped build the category over the last four decades by bringing fundamental innovation that introduced new benefits and created new segments to expand yogurt’s consumer base,” Nudi said. “But we were late to respond when Greek yogurt developed early in this decade, and our sales have suffered as a result. Our goal now is to get back to leading fundamental innovation that grows the category and our business.”

New products being introduced in US yogurt include Oui by Yoplait, a clean label variety; Yoplait Mix-Ins, a variety that combines traditional yogurt with such ingredients as pretzels, granola and almonds; a packaging refresh of Go-Gurt that makes the product easier for children to open; and a packaging refresh on Annie’s Yogurt to emphasize it is formulated with whole milk.

General Mills natural and organic food products
Sales of natural and organic products at General Mills increased 13 percent and totaled approximately $1 billion.

“In total, we know we have work to do to turn around our yogurt business, and we won’t get all the way back to home in terms of sales growth in fiscal 2018,” Nudi said. “But we have a solid pipeline of new products coming throughout the year, supported with increased consumer investment that will improve our US yogurt performance this year. We firmly believe that getting back to fundamental innovation and growing yogurt segments is the key to returning this business to growth over the long term.”

Natural and organic sales during fiscal 2017 rose 13 percent and totaled approximately $1 billion.

“We expect this portfolio to generate $1.5 billion in net sales by 2020,” Nudi added.

Annie's Puffs
Mulligan attributed organic growth in the company's organic products segment to the expandability of Annie's.

Mulligan said the company will remain active in pursuing mergers and acquisitions, referencing the acquisition of Epic Provisions in 2016 as an example, but added there are a number of issues that must be considered.

“One is we bought Annie’s,” he said. “It was in a handful of categories that we’ve expanded, which, frankly, has allowed us to avoid having to do other acquisitions. So, we’ve done organic growth in the organic segment because of the expandability of Annie’s, and that is what’s made that acquisition, which may have looked expensive to some on Day 1, a high return acquisition for us.

“The other (issue), frankly, is they’re still expensive. You have to be selective. We’re not going to throw capital away to chase growth if we know there’s no return profile.”