General Mills Will Invest in Marketing to Boost Yogurt BusinessBy
Company says it didn’t do enough to make prices competitive
Total sales have dropped for seven straight quarters
General Mills Inc., the food giant that has posted declining revenue for seven straight quarters, will invest in marketing and promotions as it tries to reignite growth in its struggling U.S. yogurt unit.
Yogurt sales in the U.S. fell 20 percent in the third quarter and Minneapolis-based General Mills pinned the decline mostly on high prices relative to its competitors. The company has been cutting costs to boost profit margins. And in the push to slash expenses, it reduced spending on promotions in its key yogurt unit. It has faced similar issues with its Progresso and Pillsbury brands.
“The price gap to our competitors has been pretty high,” Jeff Harmening, the company’s chief operating officer, said in an interview. “We have to make sure we get the pricing on the shelves better in line with the marketplace.”
Shares of General Mills fell as much as 1.2 percent to $59.51 in New York. The stock had lost 2.4 percent this year through Monday’s close.
North America accounts for two-thirds of revenue at General Mills, and the company said its meals-and-baking segment also suffered a double-digit percentage sales drop in the quarter. Revenue for the full year will decline about 4 percent, the company said Tuesday. It previously forecast a drop of 3 percent to 4 percent.
Sales were $3.79 billion in the period that ended Feb. 26. That missed the $3.8 billion average of projections. Profit of 72 cents, excluding some items, beat estimates by a penny.
As General Mills tries to end its sales slump, the company is putting more money into marketing and discounts. And the first step toward a turnaround is reinvigorating sales in the yogurt unit. That includes Yoplait, which has seen its market share fall amid the rise of Chobani, the Greek yogurt company.
“The key for us is stabilizing that business,” Harmening said.