General Mills revealed today (27 June) it will split its US retail business into three divisions and create a regional structure for its international operations as part of plans to cut costs and improve efficiency.
The company said last month it wanted to “strengthen business alignment” and “improve organisational effectiveness”. This afternoon chairman and CEO Ken Powell provided more detail of how the Yoplait manufacturer would try to achieve those goals.
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Powell said the group was “strengthening” its US retail division through the creation of three new units for meals, frozen foods and baking.
The meals arm will focus solely on “key centre-store meal items” such as Progresso soup, Hamburger Helper dinner mixes, Old El Paso Mexican foods and Betty Crocker side dishes.
“This alignment allows us to increase our emphasis on these important brands and to strengthen their growth,” Powell said.
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The frozen foods division will combine General Mills’ frozen entrees, Totino pizza and hot snacks, Pillsbury breakfast pastries and Green Giant items. The company’s US retail bakery division will include Pilsbury refrigerated dough and Betty Crocker dessert mixes.
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By GlobalDataPowell said General Mills was leaving its Big G, snacks and Yoplait divisions unchanged due to their “good category focus”.
Jim Murphy, senior VP of global strategy and growth will take up the role as head of Big G, as Jeffrey L. Harmening moves to take the role of CEO of Cereal Partners Worldwide while Christi Strauss takes a sabbatical.
Internationally, Powell said General Mills is creating a new regional operating structure to “maximise growth in the developed markets and drive differential growth in emerging markets”.
“We are creating a new Europe/Australasia region focused on driving developed market growth. Other regions are Canada, Latin America, Greater China and a region combining Asia, Middle East and Africa. We will also have two strategic business units designed to centralise and coordinate growth strategies for our two biggest global brands: Yoplait and Haagen Dazs. This new structure will allow us to generate cost efficiencies that will help fund business development around the world.”
Powell outlined the changes after General Mills announced its annual results, which included a fall in profits.
“As you all know the last 12 months was a challenging period for the food industry, input costs increased at the highest rate in over three decades. As we move into fiscal 2013 we expect slow economic growth to continue and we think the packed foods business will remain very competitive,” he said.
Nonetheless, he added: “The restructuring programme we announced last month will better align and focus resources against our best opportunities for growth, accelerate our innovation efforts and make General Mills a more efficient organisation. It will generate savings we will invest back in our businesses and enable us to deliver a balance plan for growth across our global platforms.”
General Mills’ share price was down 2.54% at $37.18 at 11:41 ET today.
