General Mills has inaugurated its first innovation, technology and quality center in China — part of its efforts to drive greater innovation and investment in one of its largest growth markets.
Pictured from left to right: General Mills EVP and president of innovation, technology and quality Peter Erickson; SVP and president of General Mills China, Gary Chu; General Mills chairman and CEO Ken Powell; CIFST president Meng Suhe; and Sanlin Party Secretary Chu Mingchang.
The $15 million facility, spanning 75,000 sq. ft., is the first major technical center outside of the General Mills worldwide headquarters in Minneapolis. The state-of-the-art complex will focus on developing high-quality products for Chinese consumers including snacks, convenient meals, yogurt and super-premium ice cream. Inside it will house centers for product research and development, food safety, food nutrition research and food sensory evaluation.
"Our new technical center in Shanghai provides General Mills a tremendous opportunity to accelerate innovation in the Greater China region and better support this rapidly expanding business," said chairman and CEO Ken Powell. "By bringing our world-class capabilities to the region, we will increase our agility to act on emerging consumer trends, enable bigger and better innovation pipelines, and establish a food safety center of excellence for our business."
General Mills also operates technical centers in Minneapolis, France, India and Brazil. In addition, the company's Cereal Partners Worldwide joint venture with Nestlé has a research center in Switzerland.
Powell was joined by EVP and president of innovation, technology and quality Peter Erickson; SVP and president of General Mills China Gary Chu; VP of supply chain and innovation, technology and quality for General Mills China Edward Lee; and local government officials at the grand opening event.
"Our continued success in China will require consistently meeting the needs and demands of our consumers," said Chu. "Throughout the last two decades, we have built a growing portfolio of brands and products that Chinese consumers have come to love and trust. With the tremendous economic growth in China, establishing greater technical capabilities in this market is critical for our continued success."
Today, China is one of the company's largest growth markets with brands such as Wanchai Ferry dim sum, Haagen-Dazs ice cream and Bugles and Trix snacks. Constant-current net sales for China have grown at a 15% compound rate throughout the past four years, reaching more than $700 million in 2014. General Mills expects double-digit net sales growth from Greater China this fiscal year. Last week, the company announced that it will expand its geographic presence for Haagen-Dazs, adding 80 new shops and entering 16 new cities in China. The company also is preparing to enter the $8 billion yogurt category and has begun construction on a new manufacturing facility in the region.
Fully one-third of General Mills sales are now outside the U.S. As a result of recent acquisitions, including Yoplait and Yoki, more than $6 billion including the company's proportionate share of joint ventures are now outside the U.S. in fast-growing, attractive categories: ready-to-eat cereal, yogurt, snacks, convenience meals and super-premium ice cream.
Outside of the U.S., General Mills is focused on the middle class consumer in emerging markets to drive faster topline growth. The emerging global middle class is expected to reach 50% of the world's population by 2030. Across China, Indonesia, India and Brazil, the sheer number of new middle class households is projected to grow by almost 200 million people between 2010 and 2020.
"These consumers are increasingly pressed for time," said Chris O'Leary, EVP and COO, international. "As a result, this emerging middle class is looking for convenient food solutions, with strong health credentials and great taste. All of which points to a huge growth opportunity for our business going forward."