With a big shift in consumer tastes shaking up the packaged food industry, General Mills will cut funding for the venerable but ailing Jolly Green Giant and move money into more promising gambits like gluten-free Cheerios and Lucky Charms.

The move is emblematic of the challenges facing General Mills, as it reported Wednesday a mixed-bag fourth quarter to cap a trying fiscal year that included deep cost cuts and about 1,400 U.S. layoffs.

Vegetables are healthy, but consumers are increasingly gravitating to fresh produce, not Green Giant’s frozen and canned fare. Cereal, General Mills’ biggest business, has seen its share of troubles, too, but the gluten-free phenomenon has worked well at the breakfast table.

“General Mills is keenly aware of consumers’ changing food habits and how that is impacting our industry,” CEO Ken Powell told analysts in a conference call Wednesday.

Golden Valley-based General Mills posted fiscal fourth-quarter net earnings of $187 million, or 30 cents per share, down 53 percent from a year ago. Excluding one-time charges, the company sported earnings per share of 75 cents. That was up 12 percent over the same quarter a year ago and beat the 71 cents forecast by analysts polled by Thomson Reuters.

The one-time charges included a $260 million write-down in the value of the Green Giant business, which General Mills has owned since it bought Pillsbury in 2001. The business, which does $600 million to $700 million in annual sales, was founded in Minnesota 112 years ago.

“We made a strategic decision to redirect certain resources supporting our Green Giant business in our U.S. retail segment to other businesses within the segment,” the company said in a news release. “Therefore, future sales and profitability projections in our long-range plan for this business declined.”

The U.S. packaged foods business is caught in a sales slump as consumer tastes have shifted somewhat from traditional processed foods.

General Mills’ net sales for the fourth quarter ending May 31 were $4.3 billion, essentially the same as a year ago, but short of analysts’ estimates of $4.5 billion.

Going natural

To fight back, Mills is upping innovation and investment in its key cereal and yogurt businesses, and emphasizing its growing organic and natural foods operation, Powell said. The company last week announced it would phase out artificial colors from its cereals.

Another initiative is removing all gluten from five Cheerios offerings, which together make up 90 percent of the iconic brand’s sales. That move was originally announced last winter. Oats — the grist for Cheerios and Lucky Charms — don’t contain gluten, but traces of the wheat protein can still exist in the cereal manufacturing process.

“This is a major initiative,” Powell said in an interview with the Star Tribune. “Thirty percent of consumers have said they have a concern with avoiding gluten, and many of those have left the cereal aisle.”

General Mills and other cereal makers have suffered declining sales the past couple of years. But cereals marketed as gluten-free — notably Mills’ Chex line — have done well.

Chex had an annualized sales growth rate of 5.1 percent between from 2010 through 2014, the best performance of all General Mills cereals during that time, according to a recent report by Alexia Howard, a stock analyst at Bernstein Research.

The frozen and canned vegetable business, Green Giant’s home, is a mature industry. Green Giant’s strength is in frozen vegetables packed in sauces, a higher end of the market. But fresh produce seems to be taking an increasing bite out of that business, as its sales have been declining significantly.

“I’m a little bit surprised at how far Green Giant has fallen,” Ken Goldman, an analyst at JPMorgan, said on the General Mills’ conference call Wednesday. “It’s not every day we see an impairment charge to this degree,” he said of the $260 million write-down.

Asset impairment charges recognize that a brand’s or business’ value has declined. With the charge, General Mills basically is saying it will spend less money on Green Giant, for example on marketing. Therefore, the business is worth less going forward.

Still, Green Giant is not a money loser. “It’s a good, profitable brand,” Powell told the Star Tribune.

Its growth prospects simply aren’t as good as those in other General Mills businesses, he said. “Every year we have to look at the opportunities we have and where to invest.”

Reuters reported earlier this year that General Mills might sell Green Giant. Powell said General Mills doesn’t comment on such speculation.

General Mills stock closed Wednesday at $57.09, up $1.37 or 2.5 percent.