Milling & Baking News - May 26, 2015 - (Page 16)

Business General Mills wants more from the core of its business LONDON - Executives at General Mills, Inc. are optimistic about the long-term outlook for the Minneapolis-based company. In a May 19 presentation at the Barclays Americas Select Conference in London, Ken Powell, chairman and chief executive officer of General Mills, said he expects the company's long-term growth model to feature low-single-digit growth in net sales, mid-single-digit growth in segment operating income and high-single-digit growth in earnings per share. He identified four business strategies he sees as being keys to delivering on that model. First, Mr. Powell said General Mills will drive more from the core of its business by renovating and innovating on its established brands and categories. "Today's consumers want more natural foods with simple ingredients, fresh foods," he said. "They are avoiding things like gluten, simple carbohydrates and artificial ingredients. They are looking for more protein, more fiber, more whole grain, more organic products. And consumers everywhere are snacking more than ever, and all of these changes create great opportunity for General Mills. We will capitalize on these opportunities by leveraging our core business platform." In the ready-to-eat cereal category, Mr. Powell said General Mills continues to work to evolve with consumer preferences. The company is posting strong growth for its granola cereals, which are on trend with consumer interest in less processed foods, he said. "Retail sales for granola cereals have increased by 26% calendar year to date," he said. "Our protein cereal varieties are also enjoying excellent growth with calendar year-to-date retail sales up 80%." The company also is embarking on a broad investment plan designed to renovate products, including a strong push to make the Cheerios franchise gluten-free. "We are taking almost 90% of the Cheerios franchise gluten-free, this equates to 11% of the total cereal category," Mr. Powell explained. "It is important to note that this is a processing change, not a reformulation. Oats are the primary ingredient in Cheerios and they are naturally glutenfree. But trace amounts of wheat, barley and rye find their way into the oat supply chain in the field or during shipping. "One of our engineers developed a mechanism for sifting out those other grains leaving us with pure oats. So consumers will be able to enjoy the same great tasting Cheerios that they love with the added benefit of knowing that they are gluten-free. Nearly 30% of U.S. consumers express an interest in gluten-free foods, so we think that this change will be a big deal. We know some consumers have turned away from the cereal aisle to seek gluten-free options for breakfast, and we think that having the largest franchise in the category gluten-free gives them a good reason to return to the category." Kellogg's Bryant: Signs show that cereal trends are improving BATTLE CREEK, MICH. - It has been a difficult past few years for the readyto-eat cereal category, but John Bryant, president and chief executive officer of The Kellogg Co., sees signs that trends are improving. "We're down around 2% to 3% in the first quarter, which is better than last year," Mr. Bryant explained during a May 5 conference call with analysts to discuss Kellogg's firstquarter fiscal 2015 results. "It's always very dangerous to predict what a category is going to do, but I'd say it's going to be down in that 16 / May 26, 2015 Milling & Baking News low single-digit range for the year." Mr. Bryant said Kellogg is seeing stronger performance in its business, especially among its top brands. "Seven of our 10 largest brands under the Kellogg brand gained share in the quarter, and the Kellogg brand itself gained about 30 basis points of share," he said. "If you look at why some of our business is doing better, Froot Loops grew about 6%, and that's being driven by some great advertising programs behind consumption, et cetera. The Raisin Bran business was up about 7%. Rice Krispies were up In addition to cereal, General Mills also has big plans in store for yogurt. In an example of how General Mills intends to reshape its portfolio, Mr. Powell said the company believes China is the next platform for growth for the company's Yoplait brand. "We are just weeks away from launching Yoplait in China," he said. "We recently received final government approvals, and we are ready to start shipping next month. We are launching with three platforms, two spoonable lines and one drinkable line with 12 flavor varieties in all. We will cultivate the Yoplait brand with Chinese consumers by emphasizing a superior quality and taste experience, and we will leverage sampling to drive trial. We are focusing our initial launch in Shanghai, and we will follow our Wanchai Ferry growth model, test and learn in our initial launch city before expanding geographically." Two other business strategies General Mills will utilize include leveraging its holistic margin management discipline to fuel growth and evolving the organization to become faster and more agile. "We identify non-value added costs in our manufacturing processes and other activities across the company, we reduce or eliminate these costs and use the savings to offset higher input prices," said Don Mulligan, executive vice-president and chief financial officer. "We also reinvest savings in advertising, R.&D. and other activities that drive sales growth." MBN 4%. In the case of Raisin Bran, we had some innovation but also some very on trend advertising as well." He said the company also is seeing improved distribution and merchandising after reinvesting back into its U.S. sales force. "Our displays are up in Q1 last year," he said. "Quite frankly we were down in Q1 last year, so part of it is the comp as well that's helping us there. And 44% share of innovation is the share of innovation that we like to see in our U.S. cereal business, but not necessarily what we had last year. I think we are seeing some good performance within the cereal business, particularly across the legacy Kellogg brands." MBN /

Table of Contents for the Digital Edition of Milling & Baking News - May 26, 2015

Milling & Baking News - May 26, 2015
Ingredient Update - Winds of change blow through ingredient fundamentals
Stay true to the science, grains group tells guidelines committee
Late News - Campbell baking and snacking unit strong
Table of Contents
News Comment - Asia trade pact crucially important to farm sector
Editorial - Flour output data point to eating trends
Late News
Business - ConAgra Foods to close Wisconsin cookie plant
Mondelez considering changes at Chicago bakery
ADM to acquire Chinese sweetener business
Ardent Mills showcases capabilities with bakery, kitchen on wheels
General Mills wants more from the core of its business
Kellogg’s Bryant: Signs show that cereal trends are improving
Financial Results - Investments a drag on Weston Foods first-quarter income
Post Holdings embraces move to value-oriented R.-T.-E. cereal
Post consolidating cereal businesses
News Feature - Baking mix brand conquers challenges in gluten-free innovation
Exports and Trade Issues - Growth in China’s imports of U.S. agricultural goods slows…for now
People - Former Darden executive to president of Panera Bread
Steve Cooper joins Schwebel Baking as chief operating officer
William Fife, longtime A.S.B. and B.C.C. member, dies
IFIC survey again finds people seek whole grains, fiber
Washington - The unsettled G.M.O. world
Weather Outlook - U.S. Plains rain puts end to multi-year drought
Guidelines timeline
Education and Research - Global warming seen causing wheat yield declines
Supplier Innovations
Ingredient Market Trends - Winter wheat harvest under way
Ingredient Week
Marketplace Business Network
Ad Index

Milling & Baking News - May 26, 2015