General Mills Reveals How It Plans to ‘Renovate’ Yogurt Products by John Kell @FortuneMagazine July 14, 2016, 11:28 AM EDT E-mail Tweet Facebook Linkedin Share icons General Mills isn’t winning in the yogurt aisle. But the Big Food giant now is promising huge changes to get competitive again. During an investor day presentation held in New York Wednesday, General Mills’ gis top executives said the company has too many “regular” and “light” yogurts and would focus on tapping the market for Greek yogurt, organic and yogurt beverages. The yogurt category is worth $84 billion globally and growing at a faster clip than other key areas General Mills competes in, like cereal and traditional snacks. “Right now our product portfolio is not aligned with the trends,” said President and Chief Operating Officer Jeff Harmening. Harmening told investors that the company is planning to “renovate” 60% of the company’s yogurt business within the next year. What does that mean? New Greek yogurt offerings, adding new flavors, and organic options under the Annie’s and Liberté brands. General Mills will also start selling yogurt-based smoothies for the first time. And there will also be big packaging changes and new brands like “Go Big,” which is focused on tweens that aren’t interested in General Mills’ Go Gurt brand (which tweens deemed too kiddie). “We were off our game in 2016 and given our recent declines, we don’t expect to return to sales growth in 2017,” Harmening warned. He outlined plans for a quick and aggressive pivot. All of the changes are meant to address changing consumption behaviors in yogurt that General Mills says it missed. The executives outlined several categories that their either had too much product in, or not enough. For example, Greek yogurts account for about 48% of retail sales overall for the latest fiscal year, but General Mills only gets 21% of its business from that segment, which is led by Chobani and Dannon. About 6% of yogurt retail sales are for organic products, but that’s a segment that General Mills doesn’t have any offerings in. It is also fast growing—with growth of 12% for the latest year. “We have a strong lineup of new and innovative yogurt products designed to put us on stronger footing,” Harmening said. Fixing the yogurt business is important for General Mills, which generates $2.8 billion annually from that section of the food aisle, or 16% of the total business. That makes it the third-largest category for General Mills, after cereals and snacks. The company has made some big financial bets in yogurt in recent years, including buying a controlling stake in French yogurt maker Yoplait SAS back in 2011 and buying Brazilian yogurt maker Carolina late last year. This Is General Mills’ First New Cereal in More Than 15 Years Millennials Think Eating Cereal Is Way Too Difficult General Mills’ VC Arm Makes Another Food Startup Investment But General Mills has found itself in this position before. Back in 2012, it announced a similar mea culpa in the yogurt business when unveiling a bold plan to launch 40 new products in a single fiscal year. Four years later, General Mills still hasn’t solved the shifting trends in yogurt, especially as it relates to Greek. Yogurt has been a steady growth category in the grocery store for at least two decades now, says NPD Group food and beverage analyst Darren Seifer. He says it is deemed healthy by Americans and also viewed as a very convenient food, so consumption trends have been favorable. Steady innovation in flavoring, subcategories like Greek, and adding mixing toppings have helped propel the category as well. One point of caution: some yogurts are high in sugar. And Americans are increasingly ditching foods with high sugar. “Consumers are pulling away from categories that tend to be sweeter and gravitating toward categories that are more savory,” said Seifer, who points out some yogurt brands have innovated to meet that trend as well. General Mills says it hopes that it can revitalize the yogurt portfolio in a way that mirrors some of the recent inroads it has made to improve positioning of the cereal line. Some of the changes including offering a gluten-free Cheerios and moves to pull artificial colors and flavors from a variety of cereal brands including Trix, Golden Grahams, and Reese’s Puffs. General Mills says sales have begun to turnaround. Retail sales for General Mills cereal slipped 3% for the first two quarters of fiscal 2016 but by the fourth quarter, the business posted a 2.8% increase.