With the COVID-19 pandemic having provided “a once-in-a-generation opportunity to drive trial for our brands,” we look at how General Mills plans to retain its new customers.
Net sales up 9.0%
The company delivered a strong performance in Q1 with net sales up 9.0% to $4.4bn, and net earnings up 22.7% to $638.9m. It continues to benefit from elevated at-home demand, with expectations that its North America retail categories will grow at a similar pace in the second quarter.
As several of its peer group have reported, General Mills is benefitting from millions of new households buying into its brands, some returning and some for the first time. New consumers are also skewed more heavily to younger and Hispanic households than existing users. To provide a platform for future strong growth, the focus is on retaining these new household. It is directing its efforts in four areas to maximise the “stickiness” of this demand.
Source: IGD Research
1. Renovating its product portfolio to improve the taste, nutrition, convenience and value of its ranges
Its product renovation work was underway prior to the pandemic with changes made to several of its leading brands, including Pillsbury, Yoplait and Progresso. With the company already seeing positive repeat purchase data, it believes that the improvements are surprising and delighting its new customers. Work will continue in this area on a brand-by-brand basis.
2. Innovating with new formats and products
General Mills continues to launch NPD, although at a lower rate than previous years. Several new products have been launched recently, with the business expecting to maintain its innovation pressure through the pandemic and recession.
3. Breakthrough brand building
The company continues to increase its media investments and adjust how it reaches its consumers. Through its two leading food websites in the US, Bettycrocker.com and Pillsbury.com, it has been able to help consumers solve their current problems. These include simple meal preparation, how to use on-hand ingredients and recreating restaurant favourites at home. It has seen a significant increase in traffic to these sites, including a 91% increase in 18-24 year olds.
4. Driving ecommerce growth
The company has several initiatives underway to build on the strong growth the channel is experiencing. Sales have almost doubled in a year, currently representing 9% of global sales, reflecting how General Mills has been investing ahead of the curve. This strategy has been driven by a recognition that ecommerce customers often place the same products in their online baskets, sticking with the same brands. To support this, it’s making investments in capabilities and marketing to ensure it retains these customers.
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