General Mills has created a giant with its yogurt business by generating $2.8 billion in annual sales. But the company has seen a significant drop off across brands in the past two years, and they believe it’s time to innovate their portfolio to become more competitive in the evolving category.
Yogurt is an Essential Food for Most
Yogurt and other yogurt-based products have experienced steady growth in sales for the past two decades. NDP Group Inc. analyst, Darren Seifer, noted that yogurt experienced a steady increase over the years because it is considered by many consumers as a healthy and convenient food. Innovation in flavoring has caught the attention of many consumers. Today, yogurt companies are designing their products to have less sugar and more protein since so many people are dropping sugar and other artificial ingredients.
However, there are many challenges involved in the yogurt industry. General Mills will probably experience challenges with creating yogurt-type products for the emerging vegan markets.Moreover, there is also an increasing demand for non-GMO yogurt.
What’s surprising about yogurt is the lack of nutrients. Many people eat yogurt as their primary source of calories for breakfast, yet they are getting no vitamins unless they eat fruit. General Mills and other yogurt brands have any opportunity to add natural vitamins from fruit and/or vegetables to supply essential nutrition to consumers’ favorite breakfast option.
General Mills Makes Bold Move
In its investor presentation, General Mills, President, and COO, Jeff Harmening mentioned that the yogurt portfolio of the company is not aligned with the latest trends. Currently, the company has too many light and regular yogurts. More competitors are offering a wider product range which includes Greek yogurt, organic yogurt, and yogurt drinks. The yogurt industry is worth $84 billion globally, and the company is only capturing less than 1% of the global market share.
Yogurt products are paramount to General Mills as it makes up 16% of the total business. The company is planning to renovate 60% of its yogurt business in the following year. This means that the corporation will be able to offer new yogurt products as well as flavors. They will also be carrying organic brands such as Annie’s due to the increasing demand for organic yogurt all over the world. This dynamic change is supposed to catch up with the change in the behavior of yogurt consumers. General Mills expects that they will be able to increase their revenues in 2017.
But aside from reinventing its yogurt portfolio, the company is also venturing to other business strategies which include buying well-known yogurt manufacturer Yoplait SAS and Carolina. The company is experiencing stiff competition with other yogurt manufacturers that have already caught up with consumer trends. While this bold move is very promising for General Mills, the challenge here is how the company will the company restructure its yogurt business to deal with the change in consumer behavior five years from now.
Inspired by fooddive.com