How Does General Mills Plan to Grow Its Revenue?
General Mills' Upcoming Fiscal 3Q16 Results: What Can You Expect?
What’s the company doing to grow revenue?
Last week, General Mills (GIS) announced its decision to accelerate its commitment to double its organic acreage. It gets its ingredients from the acreage. Now, the company expects to meet its goal of 250,000 acres by 2019. Through this initiative, the company expects to grow the net sales from its natural and organic products. Just last month, in the Consumer Analysts Group of New York conference, management mentioned that the company expects to reach $1 billion in net sales from natural and organic products by 2019. This is a full year ahead of its previous target.
The company increased its support for organic acreage by 120% since 2009. In the North American packaged food sector, General Mills is the second-largest buyer of organic fruits and vegetables. It’s among the five organic ingredient purchasers.
General Mills expects to drive double-digit industry sales growth over the next five years. To achieve this, the company made sizeable investments to meet consumers’ growing interest in natural and organic foods. The company expanded its portfolio of natural and organic brands including Cascadian Farm, Muir Glen, Mountain High, Larabar, Liberte, Food Should Taste Good, Immaculate Baking, and Annie’s. Recently, the company acquired meat snacks maker EPIC Provisions.
Management’s view of this initiative
John Church, executive vice president of General Mills Supply Chain, stated that “To achieve the growth we anticipate for our natural and organic brands, we will need a more robust pipeline of organic growers. We’re building strategic relationships directly with farmers for our products and are dedicated to working with growers to optimize production and quality, adopt standard practices and accelerate supply.”
General Mills also participates alongside other organic companies in the Organic Trade Association’s Grain, Pulse, and Oilseed Council. It’s an industry forum working in a pre-competitive effort to increase the supply of organic grain, oilseeds, and pulses.
To improve its retail sales performance in 2016, General Mills is investing in advertising and in-store promotions. It plans to launch three flavors of restaurant-style sauces in the second half of this year. It also plans to accelerate yogurt, snacks, and cereal growth through innovation. It plans to drive double-digit growth of the natural and organic portfolio.
You can invest in ETFs like the Fidelity MSCI Consumer Staples Index ETF (FSTA) and the iShares U.S. Consumer Goods ETF (IYK) to get exposure to General Mills. They both invest a total 3.4% of their portfolio in General Mills. Its peers ConAgra Foods (CAG) and Kellogg’s (K) revenues are expected to decline in the upcoming quarters by 26% and 2%. Campbell Soup’s (CPB) revenues are expected to rise by 0.16%.
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