General Mills takes growth story to the Street

Over the next five years, an optimistic General Mills expects to see double-digit shareholder returns by using a business strategy that will transform the Golden Valley-based food giant “from a multinational … to a truly global company.”

Pointing to General Mills’ stock performance, particularly “through a very difficult period in equity markets,” Chairman and CEO Ken Powell declared that it “truly has a portfolio for all seasons.”

General Mills 2015 growth goals

Net sales, as reported in billions
General Mills 2015 growth goals
Source: General Mills

Speaking at a consumer analyst meeting Tuesday in New York, Powell and his team of executives projected that General Mills (NYSE:GIS)  will see revenue grow from $14.7 billion in 2009 to $18 billion by 2015  without acquisitions. It also forsees and increase in operating income from $2.5 billion to $3.6 billion and a jump in earnings per share from $3.98 to $6.75.

The continued momentum is built on a “strong, sustainable business model,” Powell said. He outlined a company strategy that it believes will drive greater productivity and optimize its product mix. That approach, he said, will allow expanded profit margins while funding investments in marketing its brands and developing new products.

The company also outlined how it is aligning its strategy with several key demographic trends:

• Aging boomers, the 1 billion consumers globally who are 55 or older, are focused increasingly on health and wellness concerns, Powell said. The company is emphasizing the health benefits of some of its foods and introducing more health oriented offerings and smaller portion sizes, as part of its strategy.

• Recognizing that Hispanics will contribute more than half of the U.S. population growth by 2015, executive Ian Friendly described the company’s marketing campaign, “Que Rica Vida (What a rich, wonderful life),”targeting that group. The campaign drove its spending on Hispanic media up 70 percent last year, and General Mills now is the leading advertiser in Hispanic media in the United States, Friendly said.

2010-2015 projected U.S. population growth equals 15.3 million people
Source: U.S. Census 2008 update
2010-2015 projected U.S. population growth equals 15.3 million people

• With a growing middle class in developing countries around the world, General Mills is introducing product and marketing campaigns aligned with local tastes and distribution patterns. The company expects China to continue to drive much of its emerging market growth, according to International Vice President Chris O’Leary. General Mills saw its China revenue triple from 2005 to 2009 and expects a repeat of that growth with China contributing $900 million by 2015. He described the growing popularity of Häagen-Dasz ice cream in China as one measure of the growing appetite for premium foods.

• Big G execs also outlined how they are building loyalty among the online-savvy “millennial” generation as they move into adulthood. Describing home- and family-oriented customers who  eat out less often, the company is launching online marketing campaigns and products targeting millennials with recipes and easy-to-prepare meals that are fast but have a variety of ethnic flavors that caters to this group.

The consolidation of retail distribution globally is also providing what the execs described as a “tailwind” to the company’s product portfolio and marketing muscle globally. Other countries cited for their rising middle class include Brazil, India, Indonesia, Romania, Russia, Turkey and Vietnam. 

Investors must have liked what they heard. On a day when the overall market was up, General Mills stock gained $1.07 to close at $70.62.

Source: Yahoo Finance

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