- General Mills is working with GoodBelly to distribute a line of lactose-free yogurts and a single probiotic- infused cereal, reported Nosh. General Mills will be responsible for the production, sales and marketing of the products.
- The yogurt line will come in four flavors — Wild Berry, Vanilla Bean, Peach, Coconut, Strawberry and Black Cherry — and will retail for $1.29 each. The cereal will come exclusively in peanut butter crunch.
- General Mills has had a partnership with the probiotic brand since 2017 when it began distributing a line of snack bars. Last year, the CPG’s venture arm, 301 Inc, led a $12 million round of investment for NextFoods, the parent company of GoodBelly.
After 301 was established as the venture arm of General Mills in 2015, the company has invested in companies such as Kite Hill and Rhythm Superfoods. However, this distribution partnership with GoodBelly appears to take its strategy one step further with a more hands-on role in production and distribution.
This partnership works because it benefits both parties. General Mills has the distribution resources and brand marketing expertise to help brands like Good Belly reach a bigger audience. The access to its distribution network could work out for Good Belly whose partnership with General Mills focuses on yogurt and cereal, two areas where the CPG giant has a significant presence. In the case of GoodBelly, the smaller startup brings new ideas and perspectives to the bigger food company that could be used to grow sales and potentially bring a fresh way of thinking to some of its older brands.
Despite having a strong presence in yogurt with Yoplait, General Mills has struggled to revive a brand that has come under attack from other upstart products that are low in sugar, made from plants or are simply different. It introduced a French-style variety in glass jars called Oui by Yoplait, and YQ by Yoplait, made with ultra-filtered milk and featuring less sugar, but those have not been enough to revive its fortunes.
The Wall Street Journal reported that unit sales of yogurt declined through March of this year for General Mills. Meanwhile, non-dairy brands such as Kite Hill have been growing in popularity. With its newest effort in the yogurt space, General Mills is focusing on the non-lactose and probiotic-rich nature of these new products in hopes of appealing to consumers looking for better-for-you and functional foods. Probiotics are a rapidly growing area for foods and beverages, with the global market expected to hit $50 billion by 2020, according to BCC Research.
Interestingly, the branding on the new product lines appears to focus on the Good Belly name, indicating that General Mills is looking to leverage the brand’s cachet with customers. It also demonstrates that General Mills is cognizant of the fact that consumers are looking for brands that can benefit their bodies and are less loyal to household names manufactured by large CPG companies.
The new yogurt line increases General Mills' competitive position with Activia in yogurt. Owned by Danone, the yogurt brand made probiotics a familiar concept in American households. Today, however, it is not a product that resonates with young consumers, although General Mills is betting the idea of probiotic-rich health food will. With modern packaging and flavors such as coconut and black cherry that speak to a younger generation, GoodBelly has a good chance of capturing some of this market.
Yogurt makers such as Chobani have pointed to the fact that the market is inundated with products that are more or less the same. After a decade of strong growth fueled by the popularity of Greek yogurt, sales in the category fell 6% by volume in the year through February, according to Nielsen data reported by The Wall Street Journal, while Acosta reported that the number of varieties available at the average U.S. retail supermarket has increased 4% since 2015.
General Mills is hoping to tap into hot trends and attract consumers with a brand name that they are familiar with from other parts of the grocery store. If it works and the brand is able to stand apart in the crowded yogurt aisle, both companies have a lot to gain. General Mills, which has been working with GoodBelly for two years and is an investor, could decide that it wants to further tap into nascent company's success through an outright acquisition.