General Mills sells Green Giant, Le Sueur business

Updated 5:26 p.m. | Posted 9:05 a.m.

The Jolly Green Giant is moving to Parsippany.

Golden Valley, Minn.-based General Mills is selling vegetable businesses, shedding operations that are plagued by falling sales and low profits.

The move puts the company's iconic Green Giant brand in the hands of a New Jersey firm, B&G Foods.

Green Giant has shrunk in stature dramatically, and a sale has long been expected. B&G Foods is paying about $765 million for the Green Giant business, which will join other brands such as Ortega and Cream of Wheat.

General Mills acquired Green Giant with the 2001 acquisition of Pillsbury.

"It's consistent with General Mills," said Ken Shea, a Bloomberg Intelligence analyst. "They take an active approach to pruning their portfolio. One surprise to me is that B&G Foods would be interested, to be honest. It's just not a category that's seeing good growth and profitability."

The deal is expected to close by the end of the year. As part of the agreement, General Mills will continue to operate the Green Giant business in Europe and other markets under a license from B&G.

Green Giant and Le Sueur generated about $585 million in revenue for General Mills last year.

General Mills says it expects the transaction will have little impact on jobs. A spokeswoman said the company has no headcount at this time.

All of the approximately 1,000 employees at the Green Giant facility in Irapuato, Mexico will join B&G Foods.

Green Giant vegetables are produced at facilities across North America and abroad. The company contracts with Seneca Foods, which has four plants in Minnesota and 16 more in seven other states, to produce Green Giant's canned products.

The two brands being sold account for about 3 percent of General Mills' overall sales and about 60 percent of the company's vegetable business, analysts say.

Shea notes General Mills is shifting its focus to cereal and yogurt, as well as its small but growing organic and natural foods segment.

"Fresh — that's the way to go today," he says. "That's what consumers are asking for. It's perceived as more nutritious."

Morningstar analyst Erin Lash says the frozen and canned vegetable business has a lot of competitors, and General Mills' is not a dominant player.

"There are particular challenges facing the frozen vegetable business, which has been losing out as consumer maintain a penchant for fresh fare," she said. Despite that, Green Giant is one of Minnesota's oldest business success stories.

Eric Weber wrote about the giant's history for the Minnesota Historical Society. He says the concept for the giant actually started with a large variety of green peas. Ninety years ago the head of the Minnesota Valley Canning Company wanted to trademark the pea as the Green Giant, but the patent office said the name wasn't descriptive enough. So the green giant character was born. Weber says the green guy started small and a bit maniacal-looking.

"In the original pictures of him he looked kind of wilder and then gradually warmed over the years," he said.

In times when fresh vegetables were much harder to come by, Weber says the giant was associated with canned and frozen vegetables that consumers savored and trusted. That helped build the giant's credibility, marketing muscle and stature.

"This giant, they have a statue of him and he's in grocery stores all over the world," Weber said. "His green look and connection to nature plus his connection to the quality of Green Giant's products all kind of came together at the right time. TV was taking over and he could be on TV advertisements."

In 1935, the famous ad executive Leo Burnett added Jolly to the name. The first TV ads hit in the early 1960s. The giant developed iconic credibility with consumers.

"Whether it was the ho-ho-ho or the commercial with him standing over the field or just the name the green giant, it just tells consumers that this is a brand of trust," said Peter Boosalis, vice president of brand design at the Periscope advertising firm in Minneapolis.

And even though canned and frozen vegetables are lagging the Green Giant's powerful resume may mean he finds new work pitching B&G products with more sales and profit potential.