The food manufacturer and marketer is “pressing its advantage” in selling to consumers via e-commerce, CEO Jeff Harmening says. It also operates several sites designed to help retailers, bakers and distributors sell its products.

It’s only a small fraction of total sales, but e-commerce is now the fastest-growing channel for General Mills Inc., the maker of such iconic food brands as Betty Crocker, Cheerios, Pillsbury and others.

We see e-commerce as an exciting opportunity for General Mills.
Jeff Harmening, CEO
General Mills

Jeff Harmening, CEO, General Mills

E-commerce is also a channel that Minneapolis-based General Mills expects to sink a lot more resources in, CEO Jeff Harmening told Wall Street analysts yesterday on the company’s year-end earnings call. “Our focus in fiscal 2019 is on continuing the expansion into the food, drug and mass channel, while pressing our advantage in e-commerce,” Harmening told analysts based on a transcript from SeekingAlpha.com.

For the fiscal year ended May 28, global e-commerce sales for General Mills accounted for about 2% of total sales and grew year over year worldwide by about 50% and by 70% in North America, the company says. General Mills didn’t break out specific online sales numbers.

But based on 2% of total sales, which grew less than 1% from $15.61 billion in fiscal 2017 to about $15.74 billion in fiscal 2018, e-commerce sales totaled $314.8 million from about $210 million in fiscal 2017. “As consumers rapidly evolve the way they buy their food, our e-commerce capability is becoming increasingly critical to our ability to compete successfully and we are continuing to leverage our advantage in this space,” Harmening told analysts.

advertisement

Overall Walmart Inc. is General Mills’s biggest retail customer and accounts for about 29% of all North American sales, which were essentially flat at $10.11 billion, the company says.

The company’s acquisition of pet food brand Blue Buffalo, for which it paid about $8 billion in February, added to its line of products with strong online sales to consumers. “Our natural and organic brands are driving our growth in e-commerce as early adopters for food online,” Harmening told analysts.

“We’ll remain laser-focused on knowing our consumer and what’s driving them,” Harmening noted during a recent investor’s day presentation. “While the biggest shift in our industry in the last five years was driven by changing consumer food values, I believe the most significant change that will impact the next five years will be in how consumers get their food, driven by the rapid acceleration of e-commerce. We see this as an exciting opportunity for General Mills.”

E-commerce could account for about 5% of total sales in about two years. “We see this as an exciting opportunity for General Mills,” he says.

Going forward, General Mills will use Blue Buffalo as its catalyst to grow e-commerce, primarily in direct-to-consumer online sales. In 2017, online sales accounted for about 25%, or about $317.5 million, of Blue Buffalo’s total sales of $1.27 billion, says General Mills. The company hasn’t broken out any further sales information for Blue Buffalo since General Mills completed its acquisition of the natural pets foods maker in February, but says it will break out future pet segment sales in future financial reports.

advertisement

General Mills will also grow its sales through online retail channels by working with chain and online retailers such as Amazon, Walmart and Kroger in the U.S. and retailers such as Ocado.com and Tesco in the United Kingdom and JD.com in China, the company says.

General Mills will continue to invest heavily in e-commerce, although the company didn’t break out many specifics. On such General Mills brand sites as ChexMix.com, it provides links to Buy pages for purchasing its brands on Walmart.com, Amazon.com and Target.com. It also operates several product information websites, such as GeneralMillSCF.com, for convenience stores, bakers, distributors and other organizations. On BlueBuffalo.com, customers can link to Buy pages for its products on such e-commerce sites as Amazon.com, Petco.com, Chewy.com and PetFlow.com.

“We are going to increase our investment in e-commerce this coming year, because we saw the investments payoff and that is indicated in our growth rates,” Harmening told analysts. “These initiatives will enhance our growth in fiscal ‘19 and will drive further acceleration in 2020 and beyond.”

The company also says its e-commerce base is diversified. “With the addition of Blue Buffalo, where e-commerce accounts for roughly 25% of sales, we are positioned well to unlock growth in this channel,” says a General Mills spokesman. “Our fiscal 2018 U.S. e-commerce growth was broad-based, as all U.S. operating units experienced significant growth with natural and organic brands are particularly driving our growth in e-commerce.”

Sign up for a complimentary subscription to B2BecNews, a newsletter published four times a week with coverage of technology and business trends in the growing B2B e-commerce industry. B2BecNews is owned by Vertical Web Media LLC, which also publishes DigitalCommerce360.com, Internet Retailer and Internet Health Management. Follow Mark Brohan on Twitter @markbrohan.

advertisement

Follow us on LinkedIn and be the first to know when new B2BecNews content is published.