When “G” stands for growth
Long known as “Big G,” General Mills proved during fiscal 2008 that the “G” stands for growth.
During the year ended May 25, 2008, companywide annual net sales grew 10 percent to $13.7 billion from the year before. Officials said volume (measured in pounds) contributed three points of sales growth and total segment operating profits rose 6 percent to $2.4 billion - despite higher input costs as well as a 13 percent increase in consumer marketing. Net earnings also grew 13 percent to $1.3 billion.
“Fiscal 2008 was a strong year for General Mills,” said Kendall Powell, who was promoted in May 2008 to chairman when Stephen Sanger retired. “Sales and operating profit grew for all three of our major business segments (retail, foodservice, international). We posted particularly good growth in the fourth quarter and we’ve carried momentum into the start of 2009.”
General Mills said net annual sales for its Bakeries & Foodservice division grew roughly 11 percent from the year before, taking the business over the $2 billion mark.
“Pricing actions related to higher input costs more than offset a 3 percent volume decline attributable in part to the absence of volume from businesses divested in the past year,” the company noted. “Sales in the bakery channel were up 19 percent and sales to foodservice distributors and restaurant customers grew at a mid single-digit rate.”
Elsewhere, General Mills noted that the Pillsbury USA retail division (including refrigerated and frozen Pillsbury bakery products) grew its annual sales by 5 percent, thanks to contributions from Totino’s frozen pizza, frozen hot snacks and refrigerated baked goods. For the record, General Mills said its Pillsbury brand controls a leading 70 percent dollar share of the U.S. retail refrigerated dough category, according to ACNielsen data for all measured outlets.
Behind the scenes, Powell and Sanger discussed several “drivers” behind General Mills’ growth. Although no new bakery items were mentioned, new products accounted for more than 5 percent of U.S. retail net sales increases in 2008 and “we estimate that over half of those sales were incremental to our existing businesses,” the company said. Looking ahead, General Mills said it expects to launch another 300 new offerings during fiscal 2009. In tandem, the company will be emphasizing product nutrition by reducing fat, sodium and sugar and by adding extra fiber and whole grains.
In the face of stiffening branded and private label competition, General Mills said it also has increased brand support. As previously mentioned, the company raised its consumer marketing spend (undisclosed) by 13 percent during fiscal 2008.
“This investment also supports growth in sales for our brands at everyday prices, rather than at promotional discounts,” officials noted. “In 2008, baseline (or non-promoted) sales for our major U.S. retail product lines grew 4 percent overall, with stronger increases in categories such as yogurt, grain snacks and ready-to-serve soup.”
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