Shares of General Mills, which left its annual outlook unchanged in December, were down about three per cent in early trading. They have fallen nearly 19 per cent in the last 12 months.

General Mills and other packaged food companies are under pressure as lower-income shoppers, hit hardest by persistent inflation, trade down to value brands and private-label goods. At the same time, the industry is contending with evolving dietary preferences and a growing push toward healthier foods, accelerated by the broader adoption of GLP-1 weight‑loss drugs.

”Cost of living and housing pressures are reshaping spending patterns, and value is a core expectation that is here to stay,” CEO Jeffrey Harmening said at the Consumer Analyst Group of New York (CAGNY) conference on Tuesday.

Companies cut costs, lower forecasts

Executives said the company’s cereal business, its second biggest revenue generator, was under pressure from increased competition from protein offerings at breakfast.

Earlier this month, PepsiCo cut prices on core brands such as Lay’s and Doritos by up to 15 per cent following a consumer backlash against earlier price hikes, while Kraft Heinz last week paused its splitting plans and forecast weak annual earnings after missing quarterly results estimates on tepid demand.

General Mills now expects annual sales to be down 1.5 per cent to two per cent, compared with its previous range of down one per cent to an increase of one per cent.

“The previous forecast for sales to increase as much as one per cent seemed unrealistic to us. So, the updated guidance is more in line with the recent trends at the company. Moreover, the revision puts guidance more in line with the experiences at other food companies such as Kraft Heinz and Conagra,” said senior bond analyst Dave Novosel at GimmeCredit, an independent corporate bond research house.

It also sees annual adjusted operating profit and adjusted earnings per share down 16 per cent to 20 per cent in constant currency, compared with its previous range of down 10 per cent to 15 per cent in constant currency.

— Reporting by Koyena Das in Bengaluru

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Rising consumer prices and a cooling U.S. labor market have squeezed household budgets, steering shoppers to cheaper private-label alternatives and pressuring packaged food makers across the region.

The Minneapolis-based company saw quarterly volumes in its North America segment decline 16 percentage points compared with a year earlier and now expects overall category growth to fall below its long-term targets.

Tough environment for food processors

General Mills reaffirmed its annual targets of adjusted profit declining 10 per cent to 15 per cent and organic net sales ranging from down one per cent to up one per cent.

The first-quarter results underscore how tough the current environment is for food makers, who need to invest heavily to reignite volume growth, as consumers remain price-conscious but expect benefits such as added protein and distinctive flavors, Consumer Edge analyst Connor Rattigan said.

Shares were down one per cent in choppy early morning trading. The stock has dropped about 22 per cent this year.

General Mills posted a smaller‑than‑expected quarterly sales decline, helped by volume gains in its North America pet food unit and in international markets including India, China, Japan and Europe.

Net sales in the international segment rose six per cent in the quarter ended August 24, with pricing up six percentage points.

“We continue to see consumers seeking value and prioritize their spending on key benefits like protein, bold flavors, and feelings of nostalgia from brands they love,” said CEO Jeff Harmening in prepared remarks.

Pet food gains support sales

North America pet food net sales increased six per cent, partly due to the recent acquisition of Whitebridge Pet Brands’ North America business, after a one per cent decline a year earlier.

First-quarter sales fell 6.8 per cent to $4.52 billion (C$6.22 billion), slightly better than expectations for a 6.9 per cent drop to $4.51 billion, according to data compiled by LSEG.

General Mills’ adjusted profit of 86 cents per share topped estimates of 81 cents, driven partly by price increases in international and North America pet food segments.

— Reporting by Anuja Bharat Mistry and Sanskriti Shekhar in Bengaluru

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Beyond Pesticides, Moms Across America and the Organic Consumers Association on Thursday said the settlement calls for General Mills to remove the phrase “Made with 100% Natural Whole Grain Oats” from Nature Valley labels.

Why it matters: Glyphosate, particularly Bayer’s Roundup herbicide, is the center of thousands of lawsuits in North America over claims it causes cancer. The U.S. Environmental Protection Agency has assessed glyphosate to not pose a cancer risk.

The groups said independent tests showed that the granola bars contained 0.45 parts per million of glyphosate, and that oats were the “most likely” source of the herbicide.

While this was below the maximum 30 parts per million that the U.S. Environmental Protection Agency recommends, the groups said General Mills’ label was deceptive and that “no reasonable consumer” would expect the bars to contain anything unnatural.

“Nature Valley is confident in the accuracy of its label,” General Mills spokesman Mike Siemienas said in an email.

He said the Minneapolis-based company settled to avoid the cost and distraction of litigation, and focus on making Nature Valley products “with 100 percent whole grain oats.”

The settlement came 13 days after a San Francisco jury ordered Monsanto Co to pay a school groundskeeper $289 million (C$394.2 million) after he said his exposure to its Roundup weed killer and another glyphosate herbicide caused his non-Hodgkin’s lymphoma.

Bayer, which now owns Monsanto, has said it would appeal the jury’s verdict.

The General Mills lawsuit was one of many accusing food companies of using deceptive labels, including terms such as “natural” that do not have clearly understood meanings, to induce consumers to buy or pay more for their products.

In July 2017, a Minneapolis federal judge dismissed a proposed class action lawsuit over General Mills’ “100% Natural” label, saying that even if the oats contained traces of glyphosate, “there is no allegation that the oats, themselves, are not natural.”

A subsequent appeal was dismissed.

The consumer groups had sued General Mills two years ago in Superior Court in Washington, D.C.

The Organic Consumers Association sued Unilever Plc in the same court on July 9 over its labeling for Ben & Jerry’s ice cream, including a claim over the use of glyphosate.

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Economic uncertainty arising from President Donald Trump’s shifting tariff policies has weighed on consumer spending in the U.S., challenging General Mills’ efforts to drum up sales.

Why it matters: General Mills is a major buyer of grains and other agricultural goods.

“We expect the operating environment will remain volatile, with consumers pressured by widespread uncertainty from tariffs, global conflicts, and changing regulations,” CEO Jeff Harmening said.

“Amid this uncertainty, we expect consumers to remain cautious and continue seeking value.”

Shares of the Cheerios-maker were down two per cent in early trading.

The company has been trying to boost demand through new products, such as a fresh version of its Blue Buffalo pet food, betting on a rise in demand for the minimally processed fresh pet food market. But analysts expect investments in marketing and acquisitions to take a toll on its margins.

“While increased investments will pressure profitability, returning to volume growth, especially in North America Retail, is the first step to return to on-algorithm delivery, and might be a necessary pill to swallow,” said Consumer Edge analyst Connor Rattigan.

The company expects full-year adjusted profit to decline between 10 per cent and 15 per cent, compared to analysts’ estimates of a 4.8 per cent decline, according to data compiled by LSEG.

For the fourth quarter ended May 25, General Mills posted sales of $4.56 billion (C$6.26 billion), narrowly missing expectations of $4.59 billion.

Net sales at its North America retail segment, a major revenue contributor, were down 10 per cent, offsetting gains from a 12 per cent rise in General Mills’ pet segment sales in the region.

The company, however, posted an adjusted profit per share of 74 cents (C$1.02) for the reported quarter, above analysts’ estimates of 71 cents.

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The company’s efforts, including “targeted organizational actions”, are expected to be completed by the end of its fiscal year 2028, it said in a regulatory filing, adding the total cost of the restructuring would be about $130 million (C$179.6 million).

“While this news represents hard choices, they are necessary to fund product innovation … and position General Mills for long-term success,” a company spokesperson told Reuters, when asked for further details on the restructuring plans.

The move comes as the company grapples with choppy demand for its salty snacks and pet food in North America amid fierce competition from private-label rivals. In March, the company cut its annual sales and profit forecasts.

Shares of the company have slumped more than 15 per cent so far this year.

Previously, the company had said that it was planning new initiatives targeting cost savings of at least $100 million in fiscal 2026.

— Reporting by Neil J Kanatt in Bengaluru

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The company revived volumes by lowering prices across its product range, from snacks to pet food. However, it warned that higher-than-planned promotional spending would weigh on its annual profit.

Budget-strapped shoppers have shunned pricier branded products for cheaper private label brands in recent years, prompting packaged food companies to increase promotions.

“As we moved through the quarter, it became clear that our product news and media support were not breaking through because we didn’t have the right value,” CEO Jeff Harmening said on the post-earnings call.

The company said its Pillsbury branded refrigerated dough sales were “disappointing” at the start of the key holiday season when customers turn to baking.

As a result, the company is stepping up media investment in the current quarter for the dough brand to attract customers, leading to higher selling and general and administrative expenses.

“Its (General Mills’) investments in brand marketing are necessary to sustain the long-term growth of its brands, but this will also have a negative impact on margins in the short term,” Blake Droesch, analyst with eMarketer said.

General Mills now expects annual adjusted profit to fall in the range of one to three per cent, compared with the prior range of down one per cent to up one per cent.

It is now targeting the lower end of the organic net sales range of flat to up one per cent.

For the quarter ended Nov. 24, the Bugles corn chip snacks maker posted sales of $5.24 billion (C$7.51 billion), surpassing analysts’ estimates of $5.14 billion (C$7.36 billion), according to data compiled by LSEG.

Adjusted profit came in at $1.40 (C$2.01) per share, above estimates of $1.22 (C$1.75) per share.

Its volumes rose 3 percentage points, while prices decreased 1 percentage point.

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That use has prompted two class action lawsuits in California against General Mills and Quaker Oats

“The Cheerios case was filed in California on Feb. 23, three days after Quaker Oats was hit with a lawsuit that alleged a number of its granola, oatmeal and Chewy products contained the same harmful pesticide,” ClassAction. org says.

The lawsuits note that the amount of chlormequat found in oat food is 40 to 100 parts per billion, but the U.S. Environmental Protection Agency has a maximum residue level of chlormequat in oats of 40,000 p.p.b. The levels detected in cereal and granola bars is not even close to the MRL.

However, the class action suits are relying on scientists from the Environmental Working Group, who claim that the safe level of chlormequat is 30 p.p.b. per day.

General Mills, in an email to The Western Producer, said its products are safe.

“All our products adhere to all regulatory requirements,” said Mollie Wulff, a spokesperson for General Mills.

“Food safety is always our top priority at General Mills, and we take care to ensure our food is prepared and packaged in the safest way possible.”

––Robert Arnason writes for the Western Producer.

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In a ruling on Tuesday, U.S. District Judge Steven Seeger in Chicago said the risk of unfair prejudice against the egg producers and marketers by showing the graphic videos was “extreme” and outweighed any minimal value in the antitrust litigation accusing them of curbing domestic supply in order to charge higher prices.

“After watching the videos, it would not take much for jurors to believe that the egg industry abuses chickens,” Seeger wrote.

Kraft and the other plaintiffs wanted to play the videos at the trial next month to bolster their claim that an industry-wide animal welfare initiative announced in 2002 was a “sham” and actually part of a broader scheme to restrain the supply of eggs.

Seeger’s ruling on the videos was among several orders he issued on Tuesday addressing the scope of what jurors will be allowed to see and hear at the five-week trial.

Kraft and the other plaintiffs, also including General Mills and Nestle, are seeking more than US$110 million in damages against United Egg Producers and other defendants, including two farms.

Lawyers for the defendants on Wednesday did not immediately respond to a request for comment.

Representatives for Kraft and the other companies either declined to comment or did not immediately respond to a request for comment.

Seeger is presiding over a case that was previously in Philadelphia federal court as part of a multidistrict litigation proceeding. Kraft’s case returned to the Northern District of Illinois in 2019.

Lawyers for Kraft and co-plaintiffs said they obtained the videos from the Humane Society of the United States. They purport to show “day-to-day operations within defendants’ facilities.”

In a court filing, attorneys for United Egg Producers and the other defendants said the videos were “surreptitiously” recorded by animal rights activists and include “highly edited footage.”

The attorneys also said the recordings were irrelevant to the plaintiffs’ claims.

Seeger said the plaintiffs’ lawyers do not need the videos to argue that the egg industry’s promotion of animal welfare was not genuine.

“After personally watching all of the videos, the court is convinced that the videos would undermine the truth-seeking function of the trial,” Seeger wrote.

— Mike Scarcella is a Reuters legal affairs reporter in Washington, D.C.

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The company joins Nomad Foods, Premier Foods, Nestle, Mondelez and other processed food makers, which have benefited since March, when restaurants around the world closed, forcing people to eat at home.

The trend marks a bright spot for a sector that has been upended in recent years by challenger brands offering products seen as healthier or less-processed.

“In March, the company experienced an unprecedented increase in consumer demand for food at home,” General Mills said in a statement. “While the magnitude of… demand moderated in April, it remained significantly elevated compared to pre-COVID-19 levels.”

Sales of General Mills products — which include Cheerios, Progresso soups and Old El Paso meal kits — at U.S. retail stores tracked by Nielsen jumped 45 per cent in March and 32 per cent in April, the company said.

Besides basic pantry-stocking, large packaged food companies are seeing renewed strength in their traditional, classic brands, many of which have struggled to keep pace with changing tastes.

“In times of uncertainty, consumers turn to brands that they trust. They want to experiment less,” Kraft Heinz CEO Miguel Patricio said last month. “That’s what we’re seeing right now.”

A consumer survey last week by Jefferies analysts found that 38 per cent of respondents were purchasing more standard or classic brands versus only 16 per cent who were not.

Jefferies analyst Rob Dickerson said those big brands might be easier to find because their supply chains tend to be larger and more secure.

“In times of stress and duress, larger retailers are probably going to want to lean on some of their larger suppliers,” Dickerson said.

“It’s been all about the emerging brand. But all of a sudden, stuff hits the fan and when in doubt, you call on the big guys.”

Even in May and beyond, as lockdowns are lifted and eateries begin to reopen, consumers are not expected to rush out immediately, due to lingering fears about the coronavirus and soaring unemployment, which will slash household spending.

In a report last week, research firm Kelton Global found in a survey that more than 60 per cent of respondents remained afraid to go to a bar or restaurant.

Analysts at Wells Fargo estimate food-at-home sales to rise 14 per cent in 2020, and then fall five per cent in 2021.

“We suspect that between some permanent restaurant closures, lingering social distancing measures… and some stickiness to the work-from-home movement, at-home spending may not see as hard of a landing that some expect,” said Wells Fargo analysts.

Jefferies predicts an incremental boost to U.S. retail spending on food at home of around US$43 billion every three months for a period following the panic-buying that marked the early spring.

The S+P 500 Packaged Foods and Meats index is down 6.5 per cent for the year, compared to a 9.5 per cent decline for the S+P 500.

General Mills expects fourth-quarter organic net sales to increase by a double-digits percentage.

— Martinne Geller is a consumer goods correspondent for Reuters in London; additional reporting by April Joyner in New York and Nivedita Balu in Bangalore.

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The Regina-based grain handling arm of commodity firm Glencore announced Thursday it has closed a deal to buy U.S. food processor General Mills’ 50 per cent stake in the two companies’ grain terminal at Northgate, N.D.

Viterra didn’t disclose any terms of its deal with General Mills Thursday, other than to say the sale has already “received all necessary approvals.”

“We’re pleased to take on full ownership of this facility, and to continue building our presence in the U.S.,” Kyle Jeworski, Viterra’s CEO for North America, said in a release.

The two companies’ joint venture dates back to 1997, when they agreed to build the terminal at Northgate, just south of the Canada-U.S. border and about 60 km southeast of Estevan, Sask.

Saskatchewan Wheat Pool, as Viterra was then known, was in its first year as a publicly traded company and in the midst of an aggressive capital spending plan to build higher-capacity inland terminals on the Prairies.

The Northgate terminal, which opened in November 1998, was expected to be a “key marketing facility for north- and southbound grains, particularly oats, as changes occur in market dynamics, the rail regulatory framework and global market demand,” the company said at the time.

During fiscal 1999, the steel bin terminal moved over 45,000 tonnes of grain, SaskPool said at the time.

Viterra’s assets in North Dakota today also include special crops facilities at Minot and at Ray, about 150 km west of Minot. The company in 2017 also bought Gavilon Grain’s former Peavey Co. grain elevator at Grand Forks. — Glacier FarmMedia Network

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