Saturday, October 11, 2003

Oligopoly brief:  General Mills Founded in 1928 through the merger of several wheat-milling companies, General Mills is now one of the world's largest food companies. It's 2001 acquisition of Pillsbury, another leader in the baking supplies, made it the #5 food company in the world and #3 in the United States. It is the US leader in yogurt, #2 (after Kellogg's) in breakfast cereal, and the third-largest food-service supplier in the world. It is the leader in ready-to-bake products. The General Mills-Pillsbury combination almost doubled the company's size, and gave it the famous Pillsbury and Green Giant to its portfolio. It purchased Pillsbury from Diageo, for which it was not a good fit. Haagen Dazs, owned by Pillsbury/Diageo, was split. Nestle has the right to sell the brand in the US, while General Mills now sells it through the rest of the world, where is its growing steadily. Pillsbury also opened up General Mills' reach to more than 80 countries. The Betty Crocker, Green Giant, and Old El Paso brands are growing rapidly in many countries. While the breakfast cereal market is mature in the US, General Mills has looked elsewhere to guarantee its future. It does very well in snack foods, particularly with Bugles chips. It has taken a big position in the growing organic food market with its Cascadian Farms brands. It has an expanding list of fast-make meals. It also dabbles in a number of other areas, and is likely to expand its efforts by acquiring smaller rivals. The company has strengthened its position with joint ventures. It works closely with Nestle, with Cereal Partners Worldwide, which resells General Mills cereals and others outside North America. General Mills also works with Pepsico in a joint venture, called Snack Ventures Europe (SVE), to sell Bugles and other snacks alongside Pepsico's Frito-Lay snacks. (This is a nice case of friendly enemies that compete strongly domestically, both in snacks and in cereals, thanks to Pepsico's Quaker acquisition). A third joint venture involves selling soy milk with Dupont. As number five worldwide, General Mills ahs to be looking around to grow its business through acquisitions. Except in the few areas (like cereal and yogurt) where it is a leader, it doesn't have the critical weight to be a category leader. Take Progresso canned soup, for example. This is a solid, respectable brand, but it is overwhelmed in the US by Campbell's and perhaps Heinz and it has no presence abroad. We see both of those privately held companies as ripe for acquisition, and it would make sense for General Mills to pursue them. Unless it gets enough added bulk in key categories, General Mills might be a tempting target for a takeover itself. General Mills Brands Category Brands Breakfast cereal Basic 4, Boo Berry, Cheerios, Chex, Cinnamon Grahams, Cinnamon Toast Crunch, Cocoa Puffs, Cookie Crisp, Count Chocula, Country Corn Flakes, Fiber One, Franken Berry, French Toast Crunch, Gold Medal Raisin Bran, Golden Grahams, Harmony, Honey Nut Clusters, Kaboom, Kix, Lucky Charms, Cinnamon Toast Crunch, Nature Valley Granola, Nesquik (cereal)*, Oatmeal Crisp, Para Su Familia, Raisin Nut Bran, Reese's Peanut Butter Puffs *, Total, Trix, Wheaties Meals Bacos (bacon bits), Bowl Appetit (rice bowls), Chicken Helper, Complete Meals, Hamburger Helper, Pork Helper, Potato Buds (instant mashed potatoes), Potatoes Specialty, Suddenly Salad, Tuna Helper Soup Progresso Frozen foods Green Giant Mexican foods Old El Paso Barbecue (packaged meat) Lloyd's Barbeque Baking supplies Bisquick (biscuit mix), Gold Medal (flour), Wondra Flour, Betty Crocker (cake, cookie, brownie, bread, pancake mixes, including: Frosting Rich, Pouch Mix, Shake 'n Pour, Snackin' Cake, SuperMoist )   Pillsbury: Fresh Dough for Biscuits, Bread, Breadsticks, Cookies, Pie crusts, Rolls, plus frozen breakfast pastries, Pillsbury frozen waffles   Frozen pastries: Van den bergh's (Australia), JUS-ROL (UK), V.Pearl (China) Frozen pizza Totino's Ice cream Haagen Dazs (except USA) Yogurt Colombo, GO-GURT, Trix, Yoplait, Yumsters Snacks Bugles, Chex Mix, Fruit By The Foot, Fruit Gushers, Fruit Roll-Ups, Fruit Snacks, Gardetto's (salty snacks), Nature Valley Granola Bars, Pop Secret (popcorn) Pasta and sauces Latina (Australia) Noodles and wontions Wanchai Ferry (China)) Organic food (Small Planet Foods) Cascadian farms: frozen fruits and vegetables, cereals, ice cream, fruit spread, pickles, etc.; Muir Glen: tomato products, including salsas, ketchup, and sauces Soy milk 8th Continent (joint venture with Dupont) * By license 5:18:53 PM

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