General Mills is leaning into pet food

General Mills, known for Cheerios, Trix and Yoplait, is hoping pet food will help it fight lagging cereal an...

Posted: Dec 20, 2018 5:08 AM
Updated: Dec 20, 2018 5:08 AM

General Mills, known for Cheerios, Trix and Yoplait, is hoping pet food will help it fight lagging cereal and snack sales.

The company said on Wednesday that it plans to double distribution of Blue Buffalo pet food items in the food, drug and mass market channel, which includes grocery, drug stores and big box retailers like Target. It also plans to make more of its products available in more stores.

Animals and society

Companies

General Mills Incorporated

Pet food

Pets

Society

Buffalo

Continents and regions

New York (State)

North America

Northeastern United States

The Americas

United States

Business and industry sectors

Business, economy and trade

Retail and wholesale trade

Company activities and management

Company earnings

Financial performance and reports

Financial results

The efforts will lead to double digit growth in Blue Buffalo sales for the year, the company said.

In the next six months, the biggest improvement investors will see will be with Blue Buffalo, said CEO Jeff Harmening during a call discussing the company's second-quarter earnings.

Blue Buffalo's sales fell by about 7% the three months ending in November compared to the same period last year. General Mills said the loss is relative and that Blue Buffalo sales surged by 25% in the fall of last year after products were sold in mass retailers for the first time. Blue Buffalo was an independent company at the time.

In addition to increasing distribution, General Mills wants to develop more Blue Buffalo wet food and pet treats. "I think it's a huge opportunity for us," said Harmening.

General Mills (GIS) bought Blue Buffalo for $8 billion earlier this year. Harmening referred to the purchase as a "portfolio reshaping strategy" at the time. "We know that pets are family members," he said. "We want to continue to do better for all family members."

Pet food is growing faster than the broader packaged food industry. Americans spent $32 billion on it last year, according to AllianceBernstein.

The company sees similarities between its pet and human food businesses, especially when it comes to consumer trends.

In pet food "we see the same kind of trends that we do in human food," said Harmening on Wednesday, calling the phenomenon a "humanization of pet food." Consumers are increasingly interested in natural and organic foods for themselves and for their pets, he noted.

General Mills is also optimistic about its human food, even as sales have lagged for the 90-year-old company.

Cereal and yogurt sales have been a particular pain point for General Mills in recent years.

In the second quarter, North American sales of yogurt and snacks fell by 4% and US cereal sales slumped 5%. Greek and light yogurts led the yogurt decline, but Yoplait's French-style Oui and high-protein, low-sugar YQ helped offset the drive. On the snack side, Annie's fruit snacks, fruit and nut Larabar and animal-based protein EPIC bars performed relatively well.

The company attributed the drag in cereal to poor merchandising, but said that it saw improvement in November and early December and that it expects that momentum to continue next year.

So far, investors seem to be sold on General Mills' plan. Shares of the company popped nearly 7% after the report. But Alexia Howard, an analyst at AllianceBernstein, warned that outside factors could affect General Mills' plans.

"If Kellogg, Post, or private label competitors become more aggressive on price within the sector, this could create a substantial top line and/or margin headwind for General Mills," she wrote in a note.

Huntsville/Redstone
Clear
59° wxIcon
Hi: 73° Lo: 47°
Feels Like: 59°
Muscle Shoals
Clear
60° wxIcon
Hi: 75° Lo: 43°
Feels Like: 60°
Huntsville/Madison
Clear
58° wxIcon
Hi: 73° Lo: 43°
Feels Like: 58°
Decatur
Clear
59° wxIcon
Hi: 75° Lo: 45°
Feels Like: 59°
Fort Payne
Clear
58° wxIcon
Hi: 75° Lo: 44°
Feels Like: 58°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Cases: 522512

Reported Deaths: 10790
CountyCasesDeaths
Jefferson755371494
Mobile39129799
Madison34124500
Tuscaloosa25408444
Montgomery24059573
Shelby23225242
Baldwin20730302
Lee15638166
Calhoun14358311
Morgan14171273
Etowah13705348
Marshall12012220
Houston10416279
Elmore10024203
Limestone9862148
Cullman9509191
St. Clair9486236
Lauderdale9280233
DeKalb8762183
Talladega8127173
Walker7151276
Autauga6763106
Jackson6762110
Blount6532133
Colbert6236132
Coffee5436113
Dale4781111
Russell431239
Franklin421382
Chilton4130110
Covington4069115
Tallapoosa3922148
Escambia390374
Dallas3528150
Chambers3519122
Clarke347360
Marion3076100
Pike306676
Lawrence296395
Winston273272
Bibb256761
Marengo248561
Geneva246475
Pickens233259
Barbour227155
Hale218675
Butler213268
Fayette209660
Henry188444
Cherokee182744
Randolph177841
Monroe173140
Washington165538
Macon156548
Clay150255
Crenshaw149557
Cleburne147041
Lamar140034
Lowndes137353
Wilcox124727
Bullock122040
Conecuh109728
Perry107726
Sumter103332
Coosa99428
Greene91434
Choctaw58824
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Cases: 835842

Reported Deaths: 12081
CountyCasesDeaths
Shelby930851587
Davidson88030924
Knox49813624
Hamilton43402485
Rutherford42319420
Williamson27545216
Sumner23492341
Montgomery19623224
Wilson18472229
Out of TN1803295
Unassigned16760132
Sullivan16184287
Blount15180194
Bradley14599147
Washington14177242
Maury13211169
Sevier13166175
Putnam11168173
Madison10789241
Robertson9607130
Anderson8627171
Hamblen8498171
Greene7739152
Tipton7226104
Coffee6831121
Dickson6734109
Cumberland6568127
Carter6468156
Bedford6426129
Gibson6402144
McMinn636597
Roane6191102
Jefferson6073121
Loudon601669
Lawrence580686
Hawkins5781106
Monroe570995
Warren551381
Dyer5361104
Franklin508688
Fayette492178
Obion450296
Cheatham444454
Cocke443798
Rhea431275
Lincoln430663
Marshall411158
Campbell409662
Weakley402862
Giles395399
Henderson372975
Macon358077
Carroll357582
White354868
Hardin349766
Hardeman346464
Lauderdale314444
Henry312475
Marion309946
Claiborne306273
Scott305545
Overton296961
Wayne294334
Hickman280546
McNairy276854
DeKalb275653
Smith274838
Haywood268361
Grainger259149
Trousdale249022
Morgan246039
Fentress238546
Johnson231638
Bledsoe209711
Chester209451
Crockett201048
Polk200024
Unicoi194549
Cannon188931
Union186034
Grundy177933
Humphreys174221
Lake169526
Sequatchie166728
Benton163240
Decatur157338
Lewis155826
Meigs134823
Stewart130828
Jackson129935
Clay109031
Houston108533
Perry105728
Moore100017
Van Buren83421
Pickett75624
Hancock54912

Community Events