Selling cereal brands to Americans has often rested on silly rabbits, magical leprechauns, and monsters like Count Chocula. Now, General Mills is leaning on healthy bunnies.
In the latest bid to bolster General Mills’ (GIS) $2.3 billion U.S. domestic cereal business, the food maker plans to stock health-focused retailers with three USDA-certified organic cereals under the Annie’s brand. The cereals, which are made without artificial flavors, synthetic colors and preservatives, will go nationwide this summer.
The move has dual purposes. General Mills is busy expanding the Annie’s brand, which was initially well known for boxes of macaroni & cheese and snack boxes, into other categories of the food aisle including soup and yogurt. The company is also promising to remove artificial ingredients from its entire cereal line, which includes the Cheerios and Lucky Charms brands, in a bid to make those legacy brands more palatable for today’s consumers.
“More than half of U.S consumers are telling us they’re trying to avoid artificial colors and flavors and we’ve responded by announcing that our entire cereal line will have no artificial colors, no artificial flavors and no high fructose corn syrup,” said Chief Operating Officer Jeffrey Harmening, when speaking at the industry’s Consumer Analyst Group of New York (CAGNY) conference on Tuesday.
Food makers have found themselves in a position where they need to pivot quickly, as millennial consumers in particular change their eating behaviors quickly and are less loyal to legacy brands they grew up with. Research firm NPD Group, for example, has reported millennials consume cold cereal less often compared to other generations when they were the same age. Instead, they are eating eggs, pancakes and other foods they can prepare themselves.
General Mills has made some successful strides to improve the cereal business as it launches gluten-free options for Cheerios and Lucky Charms. But Annie’s, which General Mills bought for $820 million, represents one of the company’s greatest growth drivers.
Harmening said acquisitions in the natural and organic foods space has resulted in a $675 million business in the category, with expectations to expand that business to reach $1 billion in net sales by fiscal 2019 without additional acquisitions.