Trix are now for everyone.
When I was growing up, Trix was my favorite cereal. My parents always wanted me to eat Shredded Wheat or Puffed Rice, but when I was a good boy I was able to eat the sweetest and most unnatural things on Earth, save maybe Lucky Charms. I was able to eat Trix because, as the commercials during all the cartoons I liked told me, Trix are for kids.
Well, fast-forward 55 years and Trix stopped being for anyone because they were loaded with all sorts of artificial stuff. Until now. What did they do? Well, it's right on the label. They added "natural flavor." Well, how about that.
The coloring's not artificial either. OK, so maybe they are not as bright as crayon colors, but they'll do the job.
So guess what happened when General Mills (GIS) did this and also made their cereals gluten-free? Well, how about from a 6% decline to an 8% increase in sales pretty much in the time since they made the change.
Which brings me to Ken Powell, CEO of General Mills, who has turned his company upside down by listening to the client. He shed Green Giant, one of those brands uniquely associated with the pantry -- the baby boomers' bomb shelter from the days when we feared thermonuclear war with the Russians and we knew Green Giant peas would survive -- and he bought Annie's (BNNY) , the natural and organic double-digit grower. He revamped the whole cereal lineup so it grows again. He re-emphasized snacks that are good and good for you. And he stopped supporting some of the older, foundational brands with big bucks and put that money behind the growth parts of the company.
The result is the remarkable turnaround that's given you a 24% gain this year. This from a sleepy, low-risk company with a good dividend, no less.
Why does all of this matter? Because when we interviewed Ken this morning on Squawk on the Street and asked him how he knew to make these changes, he said simply he listened to the customer. What did the customer want? Natural and organic and, most important, gluten-free, which has been the real turn. How did he know?
"The heart of gluten-free is people with celiac and so they have to eat these products and this is the only thing they can eat," he said. "And then add to that the non-celiac but medically diagnosed gluten intolerant, you're talking about 6% of the population and 25 million people, a lot of people, and then add in their families who are going to be saying, 'Look, if I am buying cereal, I will do it for the whole family so I will buy gluten-free,' and so the numbers are coming in and then another 20% who just want to avoid gluten for whatever reason and the numbers are very big very rapidly."
Which brings me to the bottom line: Every single time you think natural and organic and the like has peaked, you catch a bid like the monster premium you got from Danone for WhiteWave (WWAV) , or you sense that Whole Foods (WFM) is back on the mend with its 365 stores, or you recycle back to Hain (HAIN) , as I would right now, and you end up doing well. Because you are giving the customer what she wants, and in the stock market, just like in retail, the customer is always right. (WhiteWave is part of TheStreet's Action Alerts PLUS portfolio.)