Dive Brief:
- General Mills has announced a $25 million expansion investment to increase cereal production at the company's plant in Buffalo, NY, the Associated Press reported.
- The expansion project includes new packaging equipment, upgraded ingredient systems and added production of the Corn Chex and Honey Nut Chex brands.
- General Mills will receive a $500,000 grant from both Empire State Development and the New York Power Authority, plus 5,100 kilowatts of low-cost hydropower and 500 kilowatts of electricity.
Dive Insight:
This move seems surprising for General Mills, which in recent months has been more focused on restructuring its global production through plant closures instead of expansions. That includes releasing details last month about the shutdown of the company's Progresso soup plant in Vineland, NJ.
The plant shuffle announcements began not long after General Mills announced a repositioning of its portfolio along with full-year fiscal 2016 earnings in June. That includes an overhaul of the company's yogurt brands and increased focus on brands and segments the company identified as having the "strongest profitable growth potential," including cereal, snack bars, its natural and organic portfolio, Totino's hot snacks, Old El Paso Mexican products and yogurt.
Cereal sales have tanked in recent years, but neither startups nor major manufacturers have given up on the category yet. Back to the Roots has innovated with simple ingredients and rigorous transparency to bring it a new edge. Major manufacturers have attempted to pivot cereal into reformulations that are more convenient for on-the-go consumption.