MINNEAPOLIS — General Mills is focused on three priorities to improve performance in its retail business in the United States over the next six months. Weak demand in the first half of the company’s fiscal year translated to a 3.5% decline in U.S. retail segment sales.

“We know that our first-half U.S. retail performance was not where it needed to be,” said Jeff Harmening, executive vice-president and chief operating officer of the company’s U.S. retail segment, during a Dec. 17 earnings call with financial analysts. “It is true that the slowdown in overall U.S. food and beverage industry sales is a challenge, but it is up to us to take actions to improve our own performance.

“We will do this through strong new products, meaningful renovation of existing brands and excellent execution of our marketing and customer programs.”

General Mills is innovating in the cereal category with new Cheerios varieties and gluten-free Chex.

Boosting the cereal business

The first priority for General Mills is investing in cereal. The maker of Cinnamon Toast Crunch and Cheerios has grown market share within the category in six of the past seven years, but General Mills reported a 3% decrease in retail consumer sales of its cereals through the first half of the fiscal year.

“We are starting to see some encouraging signs,” Mr. Harmening said. “Retail sales trends for the category and for our business have improved in each of the past two quarters. And our base lb volume, which measured volume sold without merchandising, has improved from down 1% in this year's first quarter to up 1% in the second quarter.”

To boost cereal sales, the company is innovating on consumer trends, such as gluten-free, added protein and simple ingredients.

“For example, the past few years have seen a sharp rise in consumer interest in gluten-free foods,” Mr. Harmening said. “We have leveraged that consumer insight to drive an incredible turnaround on our Chex cereal business. Chex was on a steady downward trend for most of the 2000s. Retail sales declined 50% between 2002 and 2009.

“Since fiscal 2010 when we began marketing the brand as a gluten-free cereal, Chex has grown at a 10% compounded rate. We expect Chex to grow again in fiscal 2015, including contributions from our new Chex gluten-free oatmeal.”

To deliver on growing demand for protein, General Mills has introduced several cereal products with added protein, including Cheerios Protein cereal in two varieties.

“Retail sales for this group of cereals are approaching $100 million in calendar 2014, up from just over $10 million last year,” Mr. Harmening said.

Products with simple ingredient labels are another area of focus in innovation for General Mills.

“Consumers today are showing interest in products they perceive as minimally processed,” Mr. Harmening said. “This is driving strong growth for the granola segment, where sales are increasing at a 10% compound rate in the past four years. We are the segment leader and retail sales for our granola sales, including Nature Valley and Cascadian Farm, America’s favorite granola, have grown at a 27% compound rate over the same timeframe.”

Over the next few months, General Mills is launching several new gluten-free cereals as well as Cheerios + Ancient Grains, made with oats, quinoa, spelt and kamut.

“We know there is still work to do on cereal,” Mr. Harmening said. “We continue to believe what the category needs is bigger, better, fresher ideas coupled with solid execution.

“We branded manufacturers need to bring renovation, innovation and advertising investment targeted to areas of consumer interest to grow sales for our business and the overall category.”

Yoplait Greek 100 Whips! is set to debut next year.

Restoring growth in yogurt

The company’s second priority this year is to restore growth in its yogurt business. General Mills has seen broad-based momentum across the category, with share of Greek yogurt rising to 12% in the second quarter from distribution gains and advertising for Yoplait Greek and Greek 100 lines.

“We have also been able to drive two successive quarters of double-digit retail sales growth on original Yoplait through product renovation and compelling snack-focused advertising,” Mr. Harmening said. “And we have seen retail sales for our kid yogurt business grow in each of the past four months. In total, our U.S. yogurt retail sales are up 5% year-to-date, and we have gained 0.5 point of share in the category.”

A new product line set to debut over the coming months is Yoplait Greek 100 Whips!, which offers the protein benefit of Greek yogurt with an airy mousse-like texture.

Nature Valley products are helping General Mills drive growth in the grain snacks category.

Healthier sales in snacks

General Mills’ third focus for improving retail performance is driving continued growth in better-for-you snacks. The company has delivered 5% retail sales growth and maintained share leadership in the grain snacks category with such new products as Fiber One Streusel and Nature Valley Protein bars.

“We have grown retail sales on our fruit snacks business by 4%, and our natural and organic snacks business is up 18% in measured channels alone, thanks to strong innovation behind our Larabar, Food Should Taste Good and Cascadian Farm brands,” Mr. Harmening said. “We have some exciting new snack items launching in the second half of this year, including Nature Valley Nut Crisp bars. We think this will be another highly incremental offering within our better-for-you snacks platform.”

With U.S. natural and organic food sales growing at a 12% compound rate for more than a decade, General Mills continues to expand its presence in the category with innovation and acquisitions.

“General Mills has built a portfolio of natural and organic brands over that time beginning with the acquisition of Small Planet Foods in 2000 and continuing with the additions of Larabar, Mountain High, Liberte, Food Should Taste Good and Immaculate Baking,” Mr. Harmening said. “The addition of Annie’s this October puts our overall natural and organic portfolio at over $600 million in net sales. That is meaningful scale for both our suppliers and our customers.”

Set to launch next year are new gluten-free snack bars and dips from the Food Should Taste Good brand, refreshed packaging for Larabar Uber bars, and a new Immaculate Baking refrigerated pizza dough.

“We see excellent opportunities to drive top-line growth by expanding the distribution of Annie’s existing portfolio as well as taking the well-loved Annie’s brand into new categories,” Mr. Harmening said.

For the second half of the year, General Mills is targeting mid-single digit growth in net sales and operating profit for the U.S. retail segment.