General Mills: ‘Technology is changing consumer behaviors and the operating environment’
He explained at the Consumer Analyst Group of New York’s Tuesday that while the company’s “exceptional brand building, innovation and execution” helped fuel growth in the last three years and “will remain critical to our success going forward,” he also recognizes that “the world around us is changing with technology having an ever-larger impact on consumer behaviors and operating environment.”
To seize the opportunities presented by this changing environment, he said, “we’ve been building new capabilities that will create meaningful competitive advantage for us in the future … and will be critical to our continued growth.”
Early promising results, paired with other efforts to boost brand awareness and consumer engagement, gave the company confidence to raise its full-year guidance for organic net sales growth to about 10% from 8-9%, and growth of its adjusted earnings per share in the 7-8% range from the previously forecast 4-6% range.
Connected commerce helps triple online US retail sales
Among General Mills investments in technology is a step-up in “connected commerce” to leverage data and insights to meet consumers across the physical and digital world, Harmening said.
“With the rise of e-commerce food sales in recent years, we’ve invested in capabilities and measurement tools to ensure our leadership at the physical shelf translates to an even stronger position at the digital shelf,” he explained.
“For example,” he said, “we’ve developed and optimized digital tools that have significantly improved organic visibility for our brands online. This has helped drive a 51% increase in ecommerce retail sales for our fruit snack business thus far in fiscal ’23.”
At a higher level, General Mills’ portion of US retail business from e-commerce tripled to more than 10% over the last three years, and the company’s e-commerce market share continues to exceed its share in brick and mortar outlets, Harmening said.
He explained the company drove e-commerce growth in part by creating “one on one relationships across digital and physical touchpoints that engage consumers along the path to purchase.”
This includes expanding or launching digital platforms, such as its food recipe websites at Pillsbury.com and Bettycrocker.com and its digital Box Tops for Education platform, across which it has 14 million monthly active users.
A recent partnership with the Good Rewards loyalty program on the Fetch mobile app has welcomed 2 million consumers and taking in 60 million lines of first part data per day in just six months since the launch.
Strategic revenue management gains from data, analytics
General Mills also is leveraging enhanced data and analytics to bolster its strategic revenue management activity to help offset unprecedented levels of cost inflation, Harmening said.
He explained with help from “robust datasets and granular analytics, we varied our SRM approach at the category and even item level to address relative price points and cliffs while maintaining our overall competitiveness.”
This helped the company’s Nielsen measured elasticities average 27% better than key branded competitors in its top 10 US categories, he said.
Supply chain digitization
Finally, Harmening said, General Mills is digitizing its supply chain to “drive increased efficiency and resiliency leading to better service at a lower cost, and in many cases with reduced carbon footprint.”
He explained the company is developing models to track the difference between actual and paid costs for ingredients and packaging materials and testing the use of real time analytics to eliminate waste in its production lines.
“We’ve seen a 30% waste reduction in initial tests, and we are planning to expand this program across our manufacturing network,” he added.
He also called out the creation of end-to-end logistics flow from suppliers through its networks to its customers’ networks.
“This will allow us to identify constraints and implement solutions that eliminate waste while optimizing inventory,” Harmening said.
While Harmening was quick to tout the company’s gains, he also acknowledged: “we’re still early in our supply chain digitization journey, and we see significant opportunities ahead to strengthen this competitive advantage, increase our efficiency and fuel profitable growth.”