General Mills' snack division totals nearly US$1.6B in sales in 2012, has posted average annual sales growth of 8.4% over past five fiscal years, helping company compensate for big downturn in its US Yoplait business
May 28, 2013
– The Jolly Green Giant has a new gig: hawking salty snacks.
Green Giant is synonymous with vegetables, from broccoli to beans. But General Mills is expanding its venerable brand to the burgeoning “veggie chip” market.
Sound far-fetched? Well, the Golden Valley-based packaged foods giant took its Fiber One brand from the cereal aisle to the snack bar shelves, creating a $300 million-plus business in just a few years.
Snacks have been the hot growth spot for packaged food firms worldwide, and General Mills is embracing the trend. From its ubiquitous Nature Valley bars to myriad Chex Mix offerings, snacks have been General Mills’ strongest U.S. business over the past five years.
The boom in snacks mirrors long-term changes in consumer eating habits, particularly the relentless trend of on-the-go eating. But researchers are wondering if all this snacking is just adding calories to an already bloated American diet.
Food firms face a paradox: People want to be healthier, but at the same time they yearn to pig out on chips and cookies. The industry supplies plenty of the latter, but generally sees healthier options as the future.
“As people snack more, they are increasingly looking for ‘better-for-you’ snacks,” said Jon Nudi, head of General Mills’ U.S. snacks business.
Mills has its indulgent treats — Nacho Cheese Bugles, anyone? — but it skews toward healthier snacks like Fiber One bars and granola-based products, food industry analysts say.
Nudi’s snack division had nearly $1.6 billion in sales last year, and has posted average annual sales growth of 8.4 percent over the past five fiscal years. The snack division’s success has helped compensate for a big downturn in General Mills’ U.S. Yoplait business, which has been hammered by its weak position in the flourishing Greek yogurt market.
The snack surge is also helping to drive financial improvements in General Mills’ food service division, a $2 billion business that sells through schools, health care facilities and, of course, convenience stores. “C-stores are the champion of snacking,” said Dave Dudick, General Mills senior vice president for bakeries and food service.
General Mills also has been building a snacking business in its natural and organic foods division through the purchase of Larabar energy bars and Food Should Taste Good salty snacks.
And snacking helped fuel one of General Mills’ biggest acquisitions in years, the nearly $1 billion deal in 2012 for Yoki Alimentos, a Brazilian food maker with a strong share of that country’s popcorn and salty snack market.
Meanwhile, Mills’ rival Kellogg last year shelled out $2.7 billion for Pringles potato chips, which are big in international markets. Over the past month, there’s been buzz about a possible epic global combination of PepsiCo’s salty snack business — Doritos, Tostitos, Lay’s, etc. — with Mondelez, home to such famous sweet brands as Cadbury, Oreo and Nabisco.
“Overall, the snack market is growing globally because of the increasing time poverty among consumers,” said Lamine Lahouasnia, Euromonitor International’s global head of packaged food research. Whether in India or Indiana, people are working longer hours and women are exiting traditional domestic roles. “We all have less time to prepare proper meals at home,” Lahouasnia said.
Success in snack bars
In the United States, snack growth has been strongest in healthier snacks, according to Euromonitor, and that includes snack bars — General Mills’ forte. The company led the U.S. snack bar market in 2012, gaining share on Kellogg, the solid No. 2 player and maker of Nutri-Grain and Special K bars, according to Euromonitor.
General Mills pioneered the granola bar market in 1975 with the Nature Valley brand, which today does more than $700 million in sales and comes in more than 30 varieties. “What’s really driven our success is aggressive innovation,” said General Mills’ Nudi.
Mills launched Nature Valley Protein bars in 2012 and they did $100 million in sales, a first-year benchmark considered a “huge success” for any new food product, said Matthew Hudak, a Euromonitor analyst. The new bar capitalizes on the current rage for protein-rich packaged food products.
General Mills was also first to invest heavily in fiber-rich snacks with the launch of the low-calorie Fiber One bar in 2007, Hudak said. The product, based on Mills’ successful Fiber One cereals, did $100 million in sales in its first year, too.
After bars, the company’s largest U.S. snack franchise is fruit snacks, a kid-targeted product that’s been criticized by some food labeling watchdogs for its relative lack of actual fruit. Next comes savory snacks led by Chex Mix.
General Mills went to the Fiber One playbook for a salty snack launched this year: Green Giant-branded Roasted Veggie Tortilla Chips and Multigrain Sweet Potato Chips. Fiber One made the leap to snacks, so why not Green Giant?
“We have the best equity in vegetables,” Nudi said. “And one of the things we see is a trend toward veggie snacks.”
Challenge in chips
Jack Russo, a stock analyst at Edward Jones, said succeeding in snack chips will be more of a stretch than winning in snack bars. “Green Giant means a lot in its core category, but taking it out [of that category] will be difficult.” Plus, he said, it’s tougher to make a healthier chip without affecting taste.
Green Giant chips have 140 calories and 6 to 7 grams of fat per serving, compared with 150 calories and 9 grams of fat in Lay’s popular kettle-cooked potato chips. They’re made with whole grain corn flour, along with either sweet potatoes or bell peppers as primary ingredients.
But if you eat a few veggie chips more than a full-serving — not difficult during a snack attack — you’re arguably no better off than eating a full serving of potato chips. Hence, the dietary dilemma of the snacking boom.
Some researchers who’ve studied the issue — such as University of North Carolina nutrition scientist Barry Popkin — say they believe increased snacking is adding calories to U.S. diets and possibly leading to more obesity.
Popkin co-authored a study that found snacking’s contribution to daily calorie intake from 1977 to 2006 rose from 18 percent to 24 percent (overall calorie intake increased, too).
However, that study included soda pop, a product generally regarded by health professionals as nutritionally barren. And some nutrition research has shown that increased eating frequency can have beneficial health effects without increasing calories.
Eating more frequently can cut both ways, said Richard Mattes, a Purdue University nutrition scientist. “There is nothing inherently wrong with snacking,” he said. “A snack can be used intelligently, or in a way that leads to weight gain.”
Mike Hughlett • 612-673-7003
© 2013 Star Tribune