General Mills reported lower-than-expected earnings for Q2, fiscal 2014 but said it plans to reinvigorate business in the second half with NPD.
The food major pulled in net sales of $4.88bn for Q2, 2014 – down 0.1% on last year. Net earnings rose slightly (1.5%) to $549.9m – up $8.3m on the previous year.
Company CEO and chairman of the board Ken Powell described the quarter as flat and below company expectations.
“The second quarter was a difficult comparison to strong prior year results for our businesses. In addition, the period included the highest quarterly input cost inflation we expect to see this fiscal year and food and beverage industry sales in the US and other developed markets slowed a bit during the quarter,” said Powell in the company’s analyst earnings call.
Despite this, Powell said the company is positive about the second half of fiscal 2014. “We like our 2014 innovation and marketing plans, which include a strong slate of new items being introduced in the second half of the year.”
Don Mulligan, CFO and executive vice president, added: “We are not waiting on industry trends to improve but given the very compelling new product lineup […] and continued strong brand support, we expect to see sales growth tick up a bit in the second half.”
Reinvigorating with innovation
General Mills will continue to expand its snacks portfolio in the convenience store channel and has NPD launches ready for January.
Spicy flavor variants of Chex chips, including wasabi and cheddar jalapeno, will hit shelves, a Fiber One meal bar will target weight conscious consumers looking for a quick meal replacement and a new line of wholegrain breakfast biscuits will be introduced under the Nature Valley brand.
General Mills will also extend its better-for-you snacks options with new Green Giant variants – sweet potato fries and cheddar veggie puffs, a popcorn Chex Mix product and Fiber One fruit snacks.
Organic snacks will also see newcomers in January, with Cascadian Farms protein granola bars and new flavors of Uber fruit and nut bars.
“We see, and continue to see, extremely strong momentum on all our snacking businesses and I don’t see anything that is going to change that, and when I look at our innovation lineup for the back half – that division has our highest percent of volume coming from innovation,” said Ian Friendly, executive vice president and COO.
“It’s a very innovation-driven category,” he added.
Cereal to hit the Super Bowl
The cereal sector will also see a flurry of NPD in the second half of fiscal 2014. Two new varieties of Fiber one protein cereal will hit retailers and a chocolate flavored cereal will join the Cinnamon Toast Crunch line. Cheerios will see a dark chocolate version on shelf and Cascadian Farms new Graham Crunch products.
General Mills plans to boost cereal with consumer directed marketing and advertising, Friendly said, including the first ad spot during the Super Bowl in 18 years for its Cheerios brand.
The Super Bowl ad slot is going to be a big event for the company, he said. “[It’s] not just an advertising idea, it’s surrounded by as all of you know, a lot of social media. It is surrounded by a lot of promotion and work with our customers.” Click HERE to see BakeryandSnacks.com's gallery on what General Mills has been up to so far in terms of innovation.