Speaking at Barclay’s Global Consumer Staples Conference, General Mills’ president and COO of global operations Jeff Harmening said that the company’s US yogurt
business continues to drive more than half of its US retail sales decline.
In the same vein, General Mills anticipates US yogurt sales declines to continue into next year but to level off towards the end of fiscal year 2017.
Renovating & innovating core yogurt products
To combat the expected decline in US yogurt sales, Harmening said that the company will be applying the same principles it used for its cereal products to its original Yoplait and Greek yogurt products, which drove the decline in its US retail yogurt sales.
Out of General Mills total net sales of $17.6bn last year, yogurt accounted for 16%, with $2.8bn.
“We need to improve our US portfolio by upgrading our Greek products, reducing our reliance on Light (yogurt products), and establishing footholds in the fast growing organic and beverage segments,” he said.
General Mills said it will renovate its entire “kids yogurt” portfolio with updated packaging and reformulating its recipes. In the next few months, the company will also introduce a reformulated line of Greek 100 products with nearly 40% more protein, while still maintaining the 100 calorie count and nine grams of sugar.
The original-style Yoplait yogurts will undergo a packaging update due to be announced in the second half of the next fiscal year.
Further push into organic
“We recently made a significant move into organic yogurt with our new Annie’s and Liberté lines,” Harmening said.
Annie’s yogurt has been the stronghold of US yogurt sales as the brand continues to experience double-digit growth since being acquired by General Mills in 2014. The organic brand’s yogurt line is child-focused and made from whole milk in a range of flavors and formats including cups, tubes, and large-sized tubs, according to Harmening.
On the other end of the age spectrum, General Mills is introducing Liberté, currently a leading brand in Canada, as a USDA certified-organic line of premium yogurt targeted towards adults.
Expanding into the ‘most promising markets’
Last year, General Mills expanded its yogurt business into China and Brazil, which Harmening calls “two of the most promising yogurt markets in the world.”
According to Euromonitor, China’s yogurt category generates more than $13bn in retail sales and has grown at a 20% compounded rate since 2010. General Mills entered this market last year with the launch of Yoplait in Shanghai, and by the end of the fiscal year it secured 10% of the yogurt market share in that city.
The company has its sights set on Beijing next for a Yoplait launch using the same business and marketing strategy.
Another area of focus for General Mills is Brazil’s $4.6bn yogurt market; it acquired regional yogurt manufacturer Carolina in December 2015.
In Canada, Harmening said General Mills is trying to reposition Yoplait yogurt from a diet product to a “great-tasting yogurt made with real fruit and no added sugar.”
Earlier this year, the company introduced a Liberté adult pouch yogurt, and is gauging consumer reception.
Looking for the next Annie’s
General Mills entered the organic business 15 years ago and said it continues to seek out new and emerging brands and has made two cash investments through its venture arm 301 Inc. in dairy and non-dairy products including Good Culture cottage cheese and Kite Hill vegan dairy products.
“In addition to investing cash, we provide these companies with capabilities from R&D to investor insights that can help them accelerate their growth and increase their odds of creating a success story similar to the one we built with Annie’s,” John Foraker, vice president and president of Annie’s said.