Past years of cost-cutting are paying off but resulting in decreased sales, according to most of the first-day presenters at the Consumer Analysts Group of New York (CAGNY) annual conference today (Feb. 16) in Florida.
General Mills, Mondelez and Hormel all followed that theme, although Tyson happily bucked it, boasting higher sales and profits.
It looks like sales will be down but profits will be up at General Mills. The Minneapolis company, which is normally one of the food industry's steadiest performers, ended its fiscal 2015 (ended May 31, 2015) down in both sales and earnings.
"I'll be the first to admit we've fallen short of our goals," said Ken Powell, chairman and CEO. Through the first half of its 2016 (as of Nov. 29, 2015), sales were $8.633 billion, down 4 percent from the year-earlier period, but net earnings were $951 million, up 39 percent.
Powell said the company has four key strategies:
- More from the core
- Fund our future (both operational cost-savings and reinvestment)
- Reshape our portfolio for growth
- Build an advantaged and agile organization
Last year's acquisition of Annie's Homegrown has worked out well and provided the company with a brand with lots of integrity and "legs." Trusted for being natural and organic, especially among parents with small children, Annie's will be introducing organic cereals and yogurt. And the brand may be tried out overseas.
By the way, General Mills is celebrating its 150th anniversary this year.
Mondelez, too, has seen its top line stall while the bottom line improves. Revenues for 2015 were $29.6 billion, down 13.5 percent from 2014, but earnings grew a whopping 233 percent to $7.3 billion.
Irene Rosenfeld, chairman and CEO, said the company has "an advantaged platform," playing in the growing snacks space (which commands 85 percent of sales) as well as emerging markets (37 percent of sales).
The company strategy has two pillars — growth and margin expansion. "By building our power brands, driving innovation platforms and expanding our distribution capabilities, we're able to leverage our advantaged platform to grow revenue at or above the rates of our categories," she said.
2016 will see more development of the higher-margin power brands and elimination of low-margin SKUs, as well as "optimizing trade spending."
Sales were down less than 1 percent at Hormel in 2015 (to $9.3 billion), but net earnings grew 7.7 percent (to $714 million). The Austin, Minn., company had not been to CAGNY for a few years, perhaps because it was digesting the biggest acquisitions in its history: Skippy peanut butter in 2013, Muscle Milk in 2014 and Applegate organic meats in 2015.
But in addition to growth from acquisition, new product innovation has been delivering sales growth for the company, thanks to new variations of Wholly Guacamole, REV protein snacks, Jenny-O turkey and even Spam. Big hopes are pinned on a truly novel product, Skippy P.B. Bites, which are spheres of peanut butter coating either pretzel centers or more peanut butter.
Chairman and CEO Jeffrey Ettinger also noted a new plant in Jiaxing, China, will be online before the end of this year.
Bucking the lower-sales trend was Tyson, which also hadn't been to CAGNY in a few years. 2015 sales were up 10 percent to $41.4 billion, and profits were up 43 percent to $1.2 billion.
"We're a different company," was the theme of the presentation. The 2014 acquisition of Hillshire Brands was somewhat transformational, bringing the Springdale, Ark., company familiar meats but in higher value-added and branded forms than Tyson previously had.
Tyson is stretching those brands into new territory. Hillshire just debuted protein snack packs (like Lunchables); hot dog brand Ballpark is developing burgers and meat jerky; and Jimmy Dean now has a bacon.
Coming soon is a Tyson Naturals brand that will attempt to add value while keeping processing to a minimum, and Tyson Tastemakers, "curated" meal kits for the home chef.