Despite facing input cost inflation of 7% during its fiscal year 2008, General Mills limited its average price increase to between 2% and 3%.
The manufacturer’s focus on what it deems “Holistic Margin Management” has allowed it to offset much of the surge, Kendall Powell, chairman and chief executive officer of General Mills, told SN.
One of the most well known examples of efficiencies resulting from the model involves Hamburger Helper.
“We cut in half the number of pasta shapes we use, to create efficiencies as part of our HMM efforts,” noted Powell. “We also studied how we could make those pasta shapes ‘nest,’ or fit together inside the box.”
The result is 20% smaller boxes, but the same quantity of product. The supplier also saves 890,000 pounds of paper fiber per year and has taken 500 trucks off the road annually.
“We were able to do all of these modifications while maintaining the same high consumer satisfaction levels with the product itself,” noted Powell, who assumed the role of CEO last September, and chairman in May.
With guidance from his predecessor, Steve Sanger, Powell has set his sights on key growth strategies, including brand building, leading customer growth, international expansion, innovation and margin expansion. “I feel the transition could not have been better, and Steve could not have been more helpful throughout,” noted Powell.
The result has been share growth on 41 of the company’s top 50 brands, including Cheerios, Betty Crocker, Pillsbury and Green Giant. During its fiscal year 2008, ended in May, General Mills grew its global net sales by 10%.
“Improvements to the health profile of existing products, and innovation to create new products with strong health attributes that consumers value, are driving growth on many of our best-selling brands,” said Powell.
During the past three years, General Mills has improved the nutritional profile of 30% of its U.S. retail products. It focuses on calorie reduction and portion control while limiting sugar, sodium and fat content, and also fortifying certain products with soluble fiber and whole grain.
Soups in its Progresso Light line have been hugely successful.
“Although protein soups constitute 75% of the category, Progresso Light is on track to deliver $100 million in first-year sales with just its vegetable soups,” said Powell.
Each of the soups contains 60 calories, 4 grams of fiber and a full serving of vegetables, and have earned a zero-point value on the Weight Watchers diet plan.
Line extensions, including one-point soups with meat and four zero-point vegetable soups, including a low-sodium soup, are planned for the coming year.
General Mills will also add to its Fiber One bar offering; the bars provide 35% of the daily recommended value of fiber. They have exceeded U.S. retail sales of $100 million in their first year.
“Within months of the product launch, Fiber One bars were among the Top 10 best-selling grain bars on the market,” noted Powell.
— JULIE GALLAGHER