General Mills Hit by Falling US Yogurt Sales
22 Sep 2016 –-- General Mill's troubled US yogurt business dented its latest quarterly sales, which fell seven percent year-on-year to $3.9bn, as the US packaged goods giant lost customers to rival organic yogurt providers. US yogurt sales represents General Mill's second largest category but sales of upstart brands such as Chobani are hurting sales of its flagship brand Yoplait. US yogurt sales fell 15 percent in the quarter, continuing a downward trend.
Speaking to the Wall Street Journal, General Mills chief operating officer Jeff Harmening said: "“The Yoplait brand isn’t damaged any more than the Cheerios brand was damaged before we made them gluten free. Consumers still love the Yoplait brand, we just have to give them what they want.”
Amidst tough competition in the yogurt market, General Mills is overhauling over half of its product range in the US as it looks to tap into customer demand for organic yogurts without artificial sweeteners.
Across US retail, sales were down eight percent to $2.3bn in the first quarter, as strong sales from Old El Paso Mexican products, fruit and nut snacks bar Larabar and Nature Valley cereals were offset by declines in Yoplait and Progresso soup.
Outside of the US, sales were down six percent on the year to $1.13bn, after its bottom line was hurt by foreign exchange rates and offloading its Green Giant vegetable brand in Canada.
Strong international performers were Yoplait and Wanchai Ferry frozen meals in China, Old El Paso Mexican products in Canada and Yoki snacks in Brazil.
However these were offset by Haagen-Dazs and Yoplait yogurt declining n in Europe.
Across convenience stores and its foodservice sector, sales were down seven percent to $446m.
“Our first-quarter profit margin expansion and EPS (earnings per share) results reflect continued good progress on our productivity and cost-savings initiatives," said General Mills chairman and chief executive Officer Ken Powell.
"However, our net sales performance did not meet our expectations due to the challenging macro environment, a difficult year-over-year comparison, and a slower start to the year on certain businesses.”
“We are taking actions to improve our net sales performance going forward, leveraging our Consumer First focus. At the same time, we have a number of encouraging examples across our global portfolio where our efforts to adapt to evolving consumer interests are driving positive results."
