General Mills Disbands Organic Division Despite Strong Sales

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Golden Valley, MN—Food mega-company General Mills has disbanded two segments of its business, the Small Planet Foods organic division and its frozen foods division, absorbing the brands into other parts of the company.

This move, which representatives of General Mills say was separate from other cost-cutting efforts in September, reduces General Mills’ operations to five business units: Big G Cereal, Yoplait, Snacks, Meals, and Baking. One particular thing to note is that the recently acquired Annie’s Homegrown is not affected by this change, and will continue to operate as a separate business.

While the frozen foods division had not been a strong seller for quite some time, Small Planet Foods was the exact opposite. With brands like Larabar and Food Should Taste Good, this division created $348 million in sales in 2014, one of the fastest-growing in the company. Even business analysts are having difficulty understanding the move. Deutsche Bank Analysts Eric Katzman and Rohini Nair wrote that they were “puzzled” about this decision, noting in Minneapolis/Saint Paul Business Journal that "Small Planet had previously been growing sales at a double-digit annual rate for over a decade as a separate unit. We point to Kellogg's recent decision to separate Kashi from the rest of its business (as it had once been run previously) after the brand struggled when managed within the overall business.”

General Mills officials have countered by saying that similar arrangements that the company has with brands like Liberté yogurt and Immaculate Baking Co. have been successful. Jeff Harmening, General Mills COO and head of retail in the U.S., also said that this consolidation would allow the smaller brands to benefit from the increased sourcing, manufacturing and R&D resources of their larger operating units.

Published in WholeFoods Magazine, February 2015 (online 12/13/14)