Packaged food giant General Mills Inc. (GIS) recently announced the launch of its Yoplait branded Greek yogurt for kids, revealing its yet another effort to turnaround the sluggish Yoplait yogurt business.
Named as Yoplait Pro-Force, this Greek yogurt is claimed to be very nutritional with high levels of protein and calcium. At the same time, it is available in attractive flavors of Strawberry Blast and Mixed Berry Burst.
Through its strategy of innovating new and established brands, the company wants to cater to the increasing global demand for packaged food. Some of these innovations, mainly in yogurt, add more nutritional value to the packaged food with more fruits, vegetables and fiber and less fat content. The idea is to appeal to the growing numbers of health-conscious customers who prefer the convenience of packaged food in a healthier way.
In the first quarter of fiscal 2013 alone, General Mills launched around 35 new products in the U.S. yogurt category. Popular among those were Yoplait Greek 100 and Liberte Greek Yogurt.
General Mills’ Yoplait yogurt business is presently struggling as increased sales prices in response to dairy cost inflation is reducing the competitiveness of its products.
The company plans to take steps to re-invigorate its yogurt business in the U.S. in 2013 through innovation and increased promotional support for new products.
General Mills carries a Zacks Rank #3 (Hold). The company announced impressive second quarter fiscal 2013 results in mid-December last year. Earnings rose 13% year on year and also beat the Zacks Consensus Estimate by almost 9%. The company also delivered solid revenue growth and upped its full-year earnings outlook.
Overall, we are encouraged by the company’s strong market share position in some leading food categories, its growing international presence, strategic acquisitions and focus on innovation and brand support. These growth initiatives combined with the cost saving efforts bode well for the company’s long-term growth. However, we prefer to remain on the sidelines until the U.S. retail volumes improve substantially, the Yoplait yogurt business delivers stronger results and the macroeconomic environment recovers.
General Mills’ competitors, Kellogg Company (K) and ConAgra Foods, Inc. (CAG) both carry a better rank; Zacks Rank #2 (Buy).
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