USA – General Mills, an American multinational manufacturer of processed consumer foods has announced that its input costs have increased by 32% on the backdrop of higher-than-normal inflation post-COVID-19.
Speaking in its quarterly earnings call recently, Jeff Harmening, CEO of General Mills said that the company’s bottom line continues to be impacted by elevated operating costs.
According to him, General Mills continues to deal with inflation levels that are higher than what they were once used to, as the food and beverage industry adapts to the post-pandemic consumer environment.
The company’s earnings report shows that while prices have remained elevated, the CPG giant saw a 1% decrease in net sales in its most recent quarter, with volumes declining two percentage points.
“The company saw its sales in its most recent quarter impacted by “value-seeking behaviours from consumers, affecting both the channels they shop and the size of the basket,” said CEO Jeff Harmening.
In addition, Harmening said the price of General Mills’ products is increasing at a 4% rate this year, compared to double-digits last year, but before the pandemic, the company was used to annual increases of 2 to 3%.
The Cheerios maker’s internal costs have increased 32% over the past three years, the CEO said.
“So the cause of prices going up really has been input cost inflation and the prices that we received,”
The cereal category has changed with the introduction of private-label offerings. These offerings, according to the CEO, hold a 10% market share, which is the same as it was in 2019.
However, Harmening laments a slight decrease of 10 basis points since the peak of the pandemic.
Looking through the 2025 lens, as headline inflation in the US eased to 3.2% in February, Harmening said: “We still see an inflationary environment.
“We’ve seen inflation is slowing, although there still is inflation, and we’ll know a lot more about what to expect out of the top-line performance in a couple of months.”
In such an environment, Harmening said General Mill’s “first line of defence” against inflation is its holistic margin management (HMM) strategy to boost efficiencies and cut costs, which remain on target for a 5% reduction in 2024.
“At the same time, we’re delivering a strong level of cost savings. We are also working to optimise our working capital and reduce our inventories,” he added.
“We made nice progress on this front in Q3, with our inventory balances at their lowest levels since the second quarter of fiscal 2022.”
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