He’s feeling his Cheerios! Kendall Powell turned in a solid fiscal year, ending May 31, 2009, for shareholders of the $15 billion Minneapolis-based General Mills. Net sales were up 8% for the year despite the recession and cost inflation.
The reason Powell bucked recessionary and inflationary cost pressures has a lot to do with Big G cereals. Cereal thrives particularly well during bad economic times, company executives point out. Cheerios enjoyed a 10% increase in measured retail outlets during the fiscal period, and new Banana Nut Cheerios, launched in January, added incremental sales.
Company performance is spiking with categories that are on-trend with consumers’ needs, Powell said. Touting the health benefits of its products, coupled with good taste and convenience, are key drivers to General Mills’ product development.
“Our products offer the nutrition, convenience and value that today’s consumers are looking for. We’re driving growth for our retail partners across the grocery store, and if we execute our product and marketing innovation plans well this year, we think the outlook is very positive for us.”
Food companies faced a record rate of cost inflation last year, yet General Mills was able to hold the line on retail price hikes. The company credits Holistic Margin Management (HMM), integral to its business model, for being able to keep brands affordable.
“Often companies have focused their efforts on ‘supply chain productivity,’ and years ago, we might have defined our productivity efforts in much the same way — but they did not always encompass all aspects of a business. HMM crosses functions and disciplines. It involves virtually everything, from product development to packaging innovations, convenience to product placement, from manufacturing to logistics to marketing to sales — with the business units taking the lead coordinating role,” he explained.
Powell said that HMM is a way of life at General Mills and has generated funds to increase consumer marketing support for brands, up 19% last year.
A high pace of product innovation in brands is also contributing to top-line sales. Expect 50 new products to launch in the first half of fiscal 2010. These include: new flavors to the Macaroni Grill Restaurant Favorites line, which helps consumers prepare restaurant-quality meals at home; Wanchai Ferry brand to the frozen section with easy-to-prepare complete meals; and a new line of Betty Crocker gluten-free baking products, which are the first national brand of gluten-free baking mixes.
“Sales for our food categories grew 50% faster than sales growth across food and beverage categories total. And our share growth across all food and beverage categories last year was 5%. We’re the only Top 10 manufacturer to grow our share of industry sales in 2009,” Powell proudly pointed out.
Under Powell’s helm the operative word is resilience. General Mills is built to deliver good growth and returns even through the most challenging economic times. “We’ve stayed tightly focused on our business model and long-term growth goals, and that’s resulted in consistent, superior performance. We were able to protect our margins, maintain innovation and invest in brand building, all which drove top line growth and very high quality earnings,” Powell stated.
— Christina Veiders