LOS ANGELES
,
March 28, 2023
(Industry Intelligence Inc.)
–
Overview
General Mills saw 16% organic net sales growth in Q3. Growth was broad based across all segments, including organic net sales up high-single digits in International and up mid-to-high teens in North America Foodservice and North America Retail.
- While the supply chain environment continues to improve, disruptions remain “well above historic averages”
- Customer service level reached 90% in US retail by the end of the quarter, though normal range is 98% to 99%
- Consumption of food at home remains stable over this past year
- “The consumer seems to be reasonably robust. And at the same time, they're eating at home more than they were during pre-pandemic. And so, we see a continuation of that.” - Jeff Harmening, CEO
Segments
North America Retail segment:
- Organic net sales grew 18% in Q3, driven by positive price/mix
- Double-digit net sales growth in US Meals and Baking Solutions and US Snacks
- High-single-digit growth in US Morning Foods and Canada
North America Foodservice segment:
- Organic net sales grew 19% in Q3, driven by positive price/mix
International segment:
- Q3 organic net sales were up 8%, driven by growth in Europe & Australia Distributor Markets, Brazil and China
- Company sees a broad reopening trend in China, where consumer traffic in Haagen-Dazs shops is steadily increasing
- Company anticipates traffic will be at or near pre-pandemic levels as it moves into summer
Looking Forward
On Private Label:
- Despite inflationary pressure on brands, CEO says private label exposure in its categories is lower than what is seen on average around the world, and that is “not really an accident.”
- “Even during the last recession... we were able to hold market share due to our brands, thanks to our investments in consumer spending.”
- “It's really the third and fourth tier players in categories that seem to get hit the hardest”
On Brand Strength:
- Company says healthy investments in brands is “critical” for long-term growth”
- To keep brands growing, company’s marketing spend is in the double digits
- Media was a “big driver” in Q3, up “strong double digits”
- Company expects media to be a driver of SG&A as company continues “turning marketing back on,” including additional spending on key platforms
- Company has grown media investment at a 4% compound rate over the past three years, and it is on track for a “strong double-digit increase” in fiscal 2023
- Investment will go to “compelling, digitally enabled, high ROI campaigns” such as Cheerios heart health and its global Haagen-Dazs campaign
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