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General Mills Whips Yoplait Into Shape
From the Wall Street Journal of Sun, 14 Dec 2014 21:15:35 EST

Years after the Greek-yogurt boom knocked the feet out from under General Mills Inc. ’s Yoplait, it’s pointing to signs of a comeback—which might be the only bright spot in the company’s earnings report this week.

Anastasia Vasilakis

A look in General Mills’s pantry reveals a number of decades-old brands, like Cheerios, Betty Crocker and Hamburger Helper, many of which are losing favor with Americans. On Wednesday, the Minneapolis company will report its fiscal second-quarter earnings. While cereal and simple meals will likely continue to struggle, yogurt and its smaller natural and organic brands could provide some relief, analysts say.

Yoplait sales inched up 1% in the previous quarter—the first rise in years—but the brand still has a long way to go.

Yoplait now has about 24% of the U.S. yogurt market, according to market research firm Nielsen, down more than 10 percentage points from 2008, thanks to Chobani Co. shaking up the yogurt aisle with Greek style, a trend Yoplait waited too long to jump into.

Overall, analysts predict General Mills will report a 2% decline in revenue for the second quarter and a 7% drop in earnings per share, according to Thomson Reuters. The company warned last month that its annual sales should grow at a low-single-digit rate this fiscal year, down from its earlier mid-single-digit forecast. It also said operating profit at its U.S. retail segment, which includes yogurt, cereal, frozen pizza and more, will probably decline.

Yoplait accounts for more than 12% of U.S. retail sales for General Mills, or $1.31 billion in fiscal 2014, which ended in May.

From fiscal 2011 through 2014, Yoplait sales fell 12.5%, a steeper decline than cereal and frozen food—two categories known for their dismal sales industrywide.

After missing the mark with its first attempt at Greek yogurt, Yoplait fared better with its 100-calorie version in 2012, but it wasn’t enough. Chobani and Dannon’s Oikos brand had already gained consumer loyalty.

Yoplait has since made other significant changes, like creating a new Greek yogurt recipe last year, which removed what critics called thickeners.

Yoplait says the recent rebound in its Greek yogurt has encouraged grocery stores to give it more shelf space, and that the extra yogurt has continued to sell through to consumers.

General Mills also removed high-fructose corn syrup from its Yoplait original yogurts and aspartame from its light products, and about six months ago, it named a new head of the division, David Clark.

He’s working on launching new Greek-style products, like Greek yogurt Whips, which will come out next month. Ironically, the Greek Whips are meant to be a “yogurt mousse” that appeals to people who don’t like the taste or texture of traditional Greek yogurt. “Greek just means higher protein to most people,” Mr. Clark said.

Mr. Clark says 81% of households in the U.S. buy yogurt, but only 6% buy it every month, indicating there is room to grow.

Yoplait has gone from 14 flavors in 1977—shortly after launching in the U.S.—to more than 85 flavors now.

While Mr. Clark is trying to spruce up his yogurt, General Mills overall is cutting back on production and laying off factory workers and corporate staff in light of the lack of demand for its food. In June, it announced a multiyear cost-cutting plan, and a few months later, it said it would close two plants, including a Yoplait factory in Methuen, Mass., which General Mills purchased in 1993 and employs 144 people.

General Mills has been investing in expansion in emerging markets as well as putting its money on natural and organic brands in the U.S., hoping to capture some meaningful growth. To that end, it recently acquired snack maker Annie’s Inc.

But emerging-markets growth is slowing, giving analysts pause on its potential. Several Wall Street firms downgraded their ratings of the stock after General Mills lowered its earnings outlook for the year. Still, shares are slightly up about 5% this year.

—The Week Ahead looks at coming corporate events.

Write to Annie Gasparro at

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