|Ken Powell, chief executive, General Mills Inc. (Genevieve Ross/ Associated Press)|
Business of food is flavored by pinch of a bitter economy
Ken Powell has been chief executive of Minnesota food-products giant General Mills Inc. since 2007. During a recent trip to Boston to meet with investors, he spoke with Globe reporter Taryn Luna about the company’s most recent acquisition, Yoplait, and the business of putting food on the world’s tables.
Why did General Mills decide to acquire a controlling interest of Yoplait earlier this month?
Yogurt is one of the truly global categories that are out there. It’s about a $65 billion dollar category, growing at about 5 percent each year. It seems to work everywhere - in all countries and all cultures. And so that was the number one reason.
There has been a push in Boston schools to provide healthier food choices for students. Does your company feel pressure to create more nutritious options?
There are three things that consumers are interested in when it comes to food. Taste is really important, as you would imagine. Convenience is very important. The last dimension is health. We reformulated, several years ago, our entire line of breakfast cereals so all of them are either a good or excellent source of whole grains. That fits perfectly now into many of the menu and dietary needs that many schools are looking for.
Another area we’re focused on is sodium. We’ve announced a pledge that by 2015, we’ll reduce the sodium across our portfolio by 20 percent, which is a significant reduction. It’s the same challenge. Consumers like what salt does in terms of tastes, and we’re trying to figure out how to reduce it and maintain the taste. The thing we figured out is that your palette adjusts. Over time, if you take incremental, steady, slow reductions of sodium, consumers don’t notice it, and their tongues adjust to it.
Commodity costs are expected to inflate by about 10 to 11 percent in 2012. How is that going to affect consumers?
You’re seeing price increases in most products in the grocery store. You’re also going to see increases in food away from home. The global demand is driven by emerging market demand.
One of the first things people do when their income starts to go up dramatically, as it has in China, India and other places, is that they improve their diet. They are going to the grocery store more. They want variety, they want all of the things that all of us want. This demand for soybeans, wheat, grain, rice, cooking oils, is the world we live in.
Why have you seen a jump in prices this year as opposed to last year?
It’s not any one thing. Stocks of many grains were a little bit lower as we came into the season this year.
The initial reports on how the growing season was advancing throughout the world were not pessimistic, but were not quite as good as we thought and that caused the prices to go way up. We’ve seen fuel prices jump. Another factor is that 40 percent of the US corn crop is going into ethanol production. So you have a huge new demand for corn.
Can you tell where we are in the recovery based on what your consumers are buying?
Our view is that it’s going to be a slow recovery. We know that consumers are being more careful. We have a very interesting look because we’re right in the family budget, we interview a lot of consumers, and we monitor this stuff.
We know that more consumers now make shopping lists before they go to the grocery store. We know there’s more planning around it. Consumers are looking for value more, and they’re using coupons. They are more thoughtful about their purchase. Our view is that the consumer is very cautious.
Do you think consumers will continue to be cautious next year and the year after?
I do. I think it’s going to be several years. We have unemployment going up again. I don’t think the consumer is seeing anything right now that would make them a little more confident.
What is your favorite General Mills product?
Cheerios. I’m a 56-year-old guy with cholesterol a little higher than it should be, among other things, so I do eat a bowl of Cheerios every day.