General Mills zeroing in on ‘value’ to spur growth again

Chex Mix had a hit with a new package this summer, a big clear jar of the snack mix that boosted sales for the General Mills-owned brand.

“People love being able to see the product,” General Mills CEO Jeff Harmening said Wednesday on a call reporting the company’s earnings. “The product is at a pretty high price point, but the packaging is remarkable. That’s an example of creating value for consumers.”

The Golden Valley-based food company is confident its idea of “value” matches what consumers are wanting.

And lower prices are just the start.

“There are a few different levers,” Harmening said. “We talk about the product itself, the packaging, the messaging, the [retail] execution and price value.”

General Mills is pulling all those levers and more to convince shoppers to buy more Chex Mix, Blue Buffalo and Pillsbury dough as the company looks to spur growth again.

Marketing investments and price reductions to move more product will dominate the coming year. As the first fiscal quarter closed with sales declining as expected, the company behind Totino’s and Old El Paso has big plans for long-term growth.

“Our number one goal for this year remains clear: restoring volume-driven organic sales growth,” Harmening said. “And the path to that goal is equally clear: investing to improve the remarkability of our total product offerings.”

Price reductions have hit a swath of the company’s retail portfolio and should reach two-thirds of General Mills’ grocery offerings by the end of the year.

That strategy is already paying off, as consumers put more baking mixes and bars in their shopping carts.

“In almost every case, we’re getting the volume response we expected,” Dana McNabb, the company’s head of North America retail and pet, told analysts Wednesday morning. “We’re feeling very confident these investments are working.”

Some areas still need work beyond the price. Like Chex Mix, Totino’s is looking at new packaging to improve sales. The brand is moving pizza rolls from bags to boxes to better jump out at shoppers.

Fresh pet food is also receiving a major investment: General Mills is sending 1,000 coolers to retailers by the end of the month for a total of 5,000 by the end of the year.

General Mills expects the Blue Buffalo Love Made Fresh brand to boost the flagging pet business as it launches this fall.

“We have a strong product,” McNabb said. “We feel very good about this launch.”

Even as a blitz of advertising will try to convince shoppers their money is well-spent on taste, nostalgia, protein and other benefits, price is still a major part of the value equation for budget-conscious consumers.

Harmening said it’s a key part of his company’s growth plan.

Not counting acquisitions and divestitures, like the recent sale of Yoplait, General Mills‘ sales dropped 3% to $4.5 billion for the quarter that ended in August. The quarter’s 108% profit growth stemmed largely from the yogurt sale as earnings reached $1.2 billion.

The company reaffirmed its expectations for the fiscal year that ends in May, with sales rising or falling 1%. Investors took the stock down less than 1% at market close Wednesday and were generally pleased with the growth plans.

“We believe this is the right approach, even if seeing its fruits takes some time,” Piper Sandler analyst Michael Lavery wrote about the price reductions.