(FORTUNE Magazine) – SPENDING AN afternoon with Betty Crocker or with the folks who make Hamburger Helper sounds about as lively as taking your grandmother to Saturday night bingo at the firehall. But General Mills, proud owner of both brands, can build excitement for old products better than anyone else in the food business. Remember Hamburger Helper, a taste treat introduced two decades ago? General Mills sold a record 180 million Helper dinners -- in 35 hamburger, tuna, and chicken varieties -- during the fiscal year that ended in June. That's 9% more than in 1990, even though few people seem to cook anymore. They don't bake either, you say? Try telling that to Betty Crocker. The 70-year-old cake lady, wooing dessert-mix users from Procter & Gamble's Duncan Hines, expanded her frosting business 13% last year. Even the company's ancient, plain-tasting cereals -- Wheaties, Cheerios, Kix -- have stolen breakfasters from Kellogg, as well as from the fruit-injected, honey-coated, nut-encrusted concoctions engineered for a new age. Says Chief Executive Bruce Atwater, 60: ''The most exciting things at General Mills right now are in the most boring businesses.'' Consider one important fact: The food industry in the U.S. grows about 1% a year. The population expands at that rate, and few people are serious about increasing their calorie intake. Now ponder General Mills' results. U.S. sales volume increased 8% in the fiscal year that ended last June, and 6% the year before. Net earnings have risen 20% annually over the past five years. General Mills' rapidly expanding restaurant chains, Red Lobster and Olive Garden, account partly for the success, but Atwater has squeezed even more growth from packaged foods. The company's consumer foods business last year contributed $641.3 million in operating income, more than twice the level of five years ago, on sales of $4.9 billion. During the recent quarter, volume rose a remarkable 13%. How has Atwater made his company a food industry leader in volume gains and profits? By following a pretty unconventional strategy: He just says no to major acquisitions and refuses to rely on costly product launches. New products are everybody's solution to wooing fickle consumers, and Atwater aims to get 25% of annual sales from items introduced in the past five years. But he intentionally has not set the goal higher because he worries that new products eat up profits and can skim away business from existing brands. Adds General Mills President Mark Willes, 50: ''If I make acquisitions or new products the answer to my growth problems, subconsciously I'll take my eye off my existing business.'' So brand managers at General Mills have something in common with Jimmy Connors and Nolan Ryan: They work very hard to prove their products are not washed up (and they may take a few painkillers at the end of the day). Says Atwater: ''The conventional wisdom of that business school on the Charles ((he's talking about Harvard)) is that there is a life cycle, and once products get to the end of their life cycle, you should give up on them. We absolutely do not believe that.'' To give FORTUNE readers a flavor for the General Mills approach, this reporter spent five days attending meetings and playing fly on the corporate wall at the company's Golden Valley, Minnesota, headquarters and at its ad agencies, DDB/Needham in Chicago and Saatchi & Saatchi in New York City. One of the key figures in the exercise was Steve Sanger, president of General Mills' $1.8 billion cereal division. At 45, Sanger is the golden boy of Golden Valley, one whom insiders peg as the company's eventual CEO. Aloof but genuine, he is quick, a bureaucracy buster and a sharp marketer. Best of all, he lately has been challenging No. 1 Kellogg in the $7.4-billion-a-year U.S. cereal business. Big G, as General Mills' cereal division is known, has just hit 29% in market share, an all-time high. Kellogg's share is 38%, down from 41% in 1988, according to John McMillin, who follows the food industry for Prudential Securities. New products like Oatmeal Crisp and Triples have helped Big G, but Sanger says, ''Our first job is to keep our established brands healthy.'' By constantly rejuvenating its old cereals, General Mills now has 12 brands with at least a 1% share of the cereal market, up from seven in 1986. Kellogg has 11. This is important because large brands are generally more efficient to manufacture and promote, and thus more profitable. Two years ago Sanger set a goal for Big G managers: Improve one-third of existing products every year with significant changes in taste, texture, nutrition, or packaging. Marketing director Christi Strauss shows how it's done. Strauss, 30, runs the kids' cereal unit, which had an estimated $635 million in retail sales last year. From her office shelves, piled high with cereal boxes, she pulls down Kix, a 54-year-old brand that's behaving like a hot new product. Volume rose 30% last year, 13% the year before. Big G gave Kix a sweeter taste and a sales boost a few years ago by putting sugar on the coating of the corn puffs instead of in the batter. Sugar content stayed the same, and TV ads touting Kix as ''low in sugar'' and ''kid-tested, mother-approved'' drove home a very marketable message. Strauss emphasizes the importance of linking new ads to product changes. Sales of Lucky Charms improved early this year after she threw a new marshmallow bit, a green tree, into an always evolving mixture of colorful hearts, moons, diamonds, horseshoes -- you get the idea. In the commercial, the Lucky Charms leprechaun -- remember him? -- weeps because his forest has lost its trees. He says that by sending in a box top and requesting a free seedling, ''you kids have the magic to make real trees!'' Over 350,000 junior horticulturists responded. AT A COMPANY where even pencils carry the message ''Sharpen up -- Suggest an idea,'' proposals come from everywhere. Big G milks cereal consumers for advice by calling almost 300 households every weekday morning to ask people what they ate for breakfast and how it tasted. Strauss encourages the R&D and manufacturing folks to be creative by inviting them to meetings when the admakers from Saatchi & Saatchi are in town. On the second floor of headquarters, a cereal packaging show is under way. It looks like a high school science fair, with 84 projects submitted by Big G's outside package manufacturers. Would you buy a cereal box with holographic portraits of Frankenberry and Count Chocula? Or with a 17-key electronic piano attached to the back panel? Suggestions from previous packaging shows have perked up soggy brands. Wheaties scored big this year with a basketball game that pops from the back of the box so breakfasters can play one-on-one with Michael Jordan. The breakfast of champions, General Mills' oldest cereal, is the pro of innovative packaging. Ever since the hometown Twins won their first World Series in 1987, Wheaties has pictured championship teams (the New York Giants, the Chicago Bulls, the Pittsburgh Penguins) on the face of limited- edition boxes. Wheaties' next offensive: a back-panel Joe Montana football game. The company hopes that the 49er's damaged elbow will not hurt sales. Compared with Kellogg, which tends not to fiddle with its core products, General Mills takes much greater risks with its big brands. And they have paid off. Big G brought out two varieties of Cheerios, Honey Nut in 1979 and Apple Cinnamon in 1988, to create a megabrand that today accounts for about 8% of corporate revenues and an even greater portion of profits. The company kept the 50-year-old original brand, known as Yellow Box Cheerios, growing by pouring in marketing money and touting its oat bran content. Two years ago Yellow Box bumped Kellogg's Frosted Flakes from the industry's top spot (in dollar sales). Now, with the oat bran craze over and volume down 1% last year, Yellow Box is neck and neck with Tony the Tiger for No. 1.

Betty Crocker Products holds court as the other major consumer foods division at General Mills. Atwater surprised many people at the company three years ago by naming Dave Murphy, then only 36, president of the $1.3 billion division. Says Murphy, a cheerleading type: ''I like to tell our people, 'We don't ride the waves of our markets. We make the waves.' '' LAST MAY he took all 200 of Betty Crocker's local employees to Minneapolis's Metrodome, the indoor baseball and football stadium, for a day he called ''Beyond the Limits.'' Murphy asked employees to forget their fears and participate in three activities they had never tried before. They could pitch baseballs to a Twin, pass footballs to a Viking, rappel a 100-foot fake mountain, windsurf, even perform stand-up comedy. The aim: to boost employee morale, creativity, and confidence. Murphy's enthusiasm -- which can get sappy at times -- has invigorated Betty Crocker. Sales volume has increased more than 10% for two years straight, and the recent quarter's 24% rise brought responses like ''stunning'' and ''shocking'' from Wall Street. Betty Crocker's Nature Valley is crunching Quaker Oats in granola snacks. Its Pop Secret popcorn is outselling ConAgra's Orville Redenbacher. And the volume of Bugles, those cone-shaped corn chips you munched at parties 20 years ago, was up 37% last year because of improved distribution, better packaging, and a new ranch flavor. Says grain snacks manager Marc Belton, 32, who oversees these businesses: ''Betty is no longer the hag queen who sits there with a stern look, like she's ready to feed you castor oil.'' The brand that best exemplifies the new vigor in Betty Crocker Products is the Helper line. Sales declined dramatically in the 1970s because the managers did not know their consumers. They stabbed blindly for growth, testing everything from deluxe Helpers to microwave versions. Vice President Jeff Rotsch, 41, who now heads Betty Crocker's main-meals and side-dishes unit, got Helper sales cooking again by focusing on its typical user: a married female homemaker with three-plus kids and a Ford Escort. Her family income is under $35,000. She is not good in the kitchen but wants to be. Says Rotsch: ''We've cut our market research organization in half over the past five years and actually improved our success because we know our consumer.'' While many companies have reduced consumer testing to get products to market more quickly, General Mills is speedier than most. Instead of spending $20,000 and two months questioning consumers in eight cities, Rotsch explains, ''We go more with what we feel.'' Example: In a meeting at Betty Crocker's research and development center, where marketers, technicians, and operations people gather every other Thursday to taste the latest test products, Rotsch commends Jeannie Gorbatenko, an assistant market-research manager. During lunch one day, Gorbatenko stood outside the General Mills cafeteria polling some 300 employees about product ideas. She gave away 800 cookies as bribes for their opinions. The cost of the data gathering: $125. The time: a couple of hours. NO MATTER how mature the market or dull the category, the attitude at General Mills is ''we try harder.'' Take Betty Crocker's $450 million dessert- mix unit. Murphy says profitability there has taken a lickin' since P&G's Duncan Hines brought cutthroat pricing to the frostings market eight years ago. ''I played their price game for a while,'' says Murphy. ''It was like I kept saying, 'Hit me. Go ahead, hit me again. I'll match your price, and damned if I'll cut my spending.' '' Betty Crocker continued introducing new varieties. It beat Duncan Hines to market with low-calorie frostings and last year brought out a successful premium-priced icing that comes with packets of dinosaur, teddy bear, or turbo-racer candies to sprinkle on Junior's birthday cake. Frosting volume was up 13% last year, and in August Murphy raised most prices above Duncan Hines's for the first time since early 1989. The battering Betty Crocker took in dessert mixes pales with its troubles in fruit snacks. General Mills essentially created the category in 1983 with Fruit Roll-ups, those sheets of sugary goo that peel off pieces of coated paper. Then Unilever's Sunkist rolled in with fruit bits that kids liked better. Betty Crocker retaliated with gummy fruit pieces called Thunder Jets, Berry Bears, and Shark Bites. Trouble was, these products cost a mint in new equipment and advertising. With profits flattened and Roll-up equipment underused in the plants, Murphy and his marketers tried to revive the original product. When they came up with such ideas as multicolored Roll-ups, most people, including the guys in the factory, vetoed them. Says Murphy: ''There was an 'it can't be done' attitude.'' But the marketers persisted, and in a project called Operation Roadkill, they walked into the plant themselves and threw Garfields -- fruity shapes of the cartoon cat -- into production lines. The giant rollers crushed the cats, creating crude versions of rainbow-colored roll-ups. These Crazy Color Roll-ups hit supermarkets recently, and the volume of Roll-ups is rising for the first time since 1984. INFLEXIBILITY in the factory still frustrates Autumn Boos, 31, general manager for fruit snacks. ''The goal of the people in the plants is to run lots of cases fast,'' she says. ''Our goal is to constantly bring something new to consumers.'' The manufacturing people do not like the way she changes the colors of the fruit-snack wrapping and places new prizes, such as glow-in- the-dark sharks, inside the boxes. She argues, ''Doing these things is crucial to growing the business.'' Betty Crocker is again on top in fruit snacks, with 50% of the $420 million market, vs. 40% in 1989. Sunkist, a sluggish innovator, has dropped from over 50% to below 10%. The new No. 2 is Farley Candy, a privately owned Chicago company that licensed Teenage Mutant Ninja Turtles and reduced the reptiles to colorful fruity bits. There's little rest for the brand builders, says CEO Atwater. But there is plenty of reward. Two years ago he set up an investment plan that allows the top dozen people in each division to put aside up to $100,000 of their salary or bonus for a minimum of three years and earn a return based on their business's performance. An unusually broad stock-option plan lets 100 managers take salary increases in stock options instead of cash, and employees own 6% of General Mills. ''We have people in their 30s with millions of dollars of General Mills stock,'' says Atwater. ''I like to say to them, 'I'm the CEO. You're the shareholder. That makes you my boss.' People are a lot freer with their ideas if they know it's their business.'' For all the irrepressible people who drive this company, two of General Mills' eight consumer foods operations have declining sales and profits. Yoplait Yogurt surrendered a terrific franchise as the best-tasting yogurt when managers fell for the Eighties fitness craze, brought out low-calorie versions that compromised on taste, and cut spending on the original recipe. Says Mark Willes: ''We can introduce new product after new product, but we'll never succeed with Yoplait, or with any other business, unless we fix the core product.'' Gorton's frozen seafood erred in a different way, innovating too slowly before it introduced low-fat fish sticks this year. ''We talk about speed,'' says Willes. ''If we had had this 90% fat-free product two years ago, we'd be in much better shape today.''

FOR THE FIRST TIME in several years, General Mills is now spending more to market Yoplait's and Gorton's core products, hoping that what rejuvenated Kix, Hamburger Helper, and other once-troubled brands will work here too. Atwater's advice is pretty simple: Do not believe in product life cycles. Innovate constantly. Take risks. Do not live and die by consumer research. Reward everyone for their ideas. If it all comes together, a company can teach even its most dog-eared brands some new Trix.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: GENERAL MILLS CAPTION: BIG G CEREALS ARE POPPING Kix has increased sales (in pounds) 174% since 1981. Cheerios (including Honey Nut and Apple Cinnamon) is up 74%, vs. 28% for the industry. ; CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: GENERAL MILLS

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: GENERAL MILLS CAPTION: FAVORITES FROM BETTY CROCKER Fruit snacks are ripe again. Helper sales have risen 167%. Desserts look flat, but they are eating into Duncan Hines's market share.