General Mills CEO Sees a World With Fewer Soups on the Shelves
(Bloomberg) -- The soup aisle probably won’t ever look the same again.
General Mills Inc., whose vast array of packaged foods spans Progresso to Cheerios to Yoplait, has cut 40 types of soup from its lineup during the coronavirus pandemic -- almost half of the company’s offerings -- as it rethinks products in an age of pantry-loading. And those flavors, Chief Executive Officer Jeffrey Harmening says, won’t be coming back.
“They may not be able to get 16 varieties of chicken noodle, but they can still get chicken noodle” he said in a video interview from Minneapolis. “As I think forward a year from now, I think that we’ll see fewer varieties on the shelf.”
Americans, used to being spoiled for choice at the grocery store, may see the shift to fewer product offerings is a long-lasting change even once the pandemic ends. It’s part of a broader shift brought about by lockdowns that’s altering the way consumers shop and eat. People are spending more time in the kitchen and turning back to old-school brands that offer comfort during an unsettling time.
That’s creating an opportunity for the company that makes pantry staples like Betty Crocker, Harmening said. General Mills is already seeing the benefits, with sales and profit both up sharply last quarter.
Its shares rose 13% this year through Wednesday, even as the broader market declined.
The culling of soup doesn’t mean it’s falling out of favor -- in fact, the U.S. unit that includes Progresso saw retail sales soar 68% last quarter. The reduction in varieties is due more to retailers, which are often faced with complicated logistics of e-commerce, preferring to carry fewer products, allowing General Mills to focus on its best sellers. That was happening even before the pandemic, but it has accelerated recently, Harmening said.
General Mills is closely monitoring the reopening, and expects the shift to dine-in eating to be the largest factor impacting performance this year. That balance will vary based on how safe consumers feel about eating in restaurants, the duration of work from home requirements and changes in income to wide swaths of the population hit by layoffs.
While demand for packaged foods has exploded through the pandemic, General Mills is trying to ensure that interest doesn’t fade once the lockdowns end, Harmening said. The company has boosted advertising spending and tweaked ad content to better fit with social distancing norms.
Harmening said General Mills is continuing to advertise on social media and has not joined the effort to boycott Facebook and other platforms. He said General Mills instead is working with the social-media company and a number of other advertisers “to help effect change from the inside,” but would reconsider if he doesn’t see needed changes.
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