Executives tell analysts the business is growing overseas but still soft at home.
It’s a tale of two worlds for General Mills: a developing one with countries like China and Brazil where sales are solid, and a developed one where business has been stagnant, particularly in the United States.
That was the message Tuesday as General Mills Inc. executives spoke at the Consumer Analyst Group of New York conference in Boca Raton, Fla.
“It’s been a tough winter for U.S. consumers and for U.S. food industry sales,” General Mills CEO Ken Powell said, kicking off the annual confab.
Indeed, “softer than expected” has become a watchword for sales at General Mills and other U.S. packaged food producers for the past several quarters. Powell noted the gloom that some stock industry analysts have for the industry in this country.
However, “we don’t share the general pessimism about long-term growth,” he said. Consumer spending is rising and the jobs picture is improving. “There’s plenty of growth to be had, and it’s our job to get it.”
The packaged-food industry needs to boost its innovation, he said.
Shares of General Mills closed Tuesday at $49.68, down 21 cents.
While the United States still makes up the bulk of General Mills sales, the company has greatly expanded overseas in recent years. About one-third of its sales now come from outside this country. China has long been General Mills’ biggest emerging market, where the company’s Häagen-Dazs ice cream and Wanchai Ferry frozen meals are consumer staples.
China’s economy has seen its own slowdown over the past year. But “we are not seeing much of an impact on our business,” said Christopher O’Leary, chief operating officer of General Mills’ international business.
O’Leary revealed plans for General Mills to soon open its first yogurt production plant in China, an effort to tap into a yogurt market expected to double in the next five years. General Mills bought into the overseas yogurt business a couple of years ago by acquiring a 51 percent interest in France-based Yoplait S.A.S. for just over $1 billion.
The company’s other big deal recently was the nearly $1 billion purchase of Brazilian packaged-food maker Yoki Alimentos, and it seems to be paying off.
In its first full year under General Mills’ wing, Yoki’s net sales, adjusted for any currency fluctuations, were up almost 20 percent while profitability improved, said Sean Walker, senior vice president for Latin America. A slowdown in Brazil’s economy hasn’t been reflected in Yoki’s business either, he said.
Mike Hughlett • 612-673-7003