Retail sales performance
To improve its retail sales performance in 2016, General Mills (GIS) is investing in advertising and in-store promotions. It plans to launch three flavors of restaurant-style sauces in the second half of this year.
The company also plans to accelerate yogurt, snacks, and cereal growth through innovation. It plans to drive the double-digit growth of the natural and organic portfolio.
Let’s look at retail sales for fiscal 3Q16
General Mills (GIS) saw retail sales improvement for the fourth consecutive quarter. The company continues to see growth in all of its categories. High competitive activity affected the net sales for the Yogurt operating unit. Reduced display merchandising mainly impacted the Cereal and Snacks results. Retail sales trends in the Cereal category have improved in fiscal 2016 so far.
Consumer First product renovation, effective messaging and on-trend innovation is driving this growth. General Mills’ product renovation initiatives seem to be benefiting the Cereal business. Retail sales of gluten-free Cheerios varieties have increased 2% since the product line was launched.
As of January 2016, 75% of the company’s cereals no longer include artificial flavors and colors. Around seven of the cereals received recipe changes in January. These cereals delivered 6% retail sales growth since their launch, after suffering a 6% decline last year. Cinnamon Toast Crunch delivered 8% retail sales growth this year.
As part of the Cereal segment’s innovation efforts in recent years, Nature Valley was launched as a protein granola product. It has been extended to include ready-to-eat cereal, muesli, granola bites, and oatmeal. Retail sales for this franchise showed a 44% improvement last year and a 35% improvement so far in 2016, owing to a combination of media support, new product news, and sampling.
General Mills (GIS) feels that yogurt is an attractive growth category for the long term. To drive growth in this category, it is taking initiatives such as expanding usage occasions, generating news, and attracting new consumers. The company is confident that innovation and effective marketing could be the key factors for growth in this category over time.
General Mills’ peers Snyder Lance (LNCE), Ingredion (INGR), and Hain Celestial (HAIN) returned -10.3%, 10.01%, and 1.3%, respectively, year-to-date. The PowerShares DWA Consumer Staples Momentum Portfolio ETF (PSL) invests 2.5% of its portfolio in INGR.