Coronavirus is changing food demand by the week, General Mills says

General Mills raised its outlook for the year on Wednesday as it races to keep up with demand for cereals, soups and other products that spiked in recent weeks as Americans holed up in their homes due to the coronavirus.

Executives of the Golden Valley-based food company said they have been in closer contact with U.S. retailers than ever before, with its plants running at full capacity as Americans stockpile food and household goods.

General Mills is staffing a 24/7 operation it calls a "control tower" with workers looking across all of its global businesses, watching demand levels and making sure it matches where and how much of certain product lines it has running across its manufacturing facilities.

"Maybe you've seen photos of empty store shelves. But food continues to flow. We continue to make it. Stores continue to stock," Jeff Harmening, the company's chief executive, said. "The change in consumer behavior are the likes of which we have never seen."

But what was true last week, isn't true this week, he added, making it difficult for General Mills to forecast demand.

Sales of shelf-stable foods like cereal, soup and baking flour surged last week. But this week, sales are up across all its categories, including perishable items like yogurt. That likely reflects restaurant and school closures and a growing number of adults working from home.

"These sales can't yet be measured in Nielsen, but it's fundamentally different from what we saw a week ago," Harmening told the Star Tribune. "The situation is evolving so rapidly, we don't know the depth and we don't know the duration."

The company's U.S. retail sales were up in the double digits last week and "many times" more that this week.

To protect its production levels and ward off COVID-19 outbreaks at its plants, General Mills has made changes to its sick policy to encourage workers to stay home if unwell.

The company is now offering 14 days of paid time off and staggering lunch breaks to avoid workers congregating in large groups. The risk isn't transmission through food, but between workers, Harmening said.

Its new quarterly results reflected effects of the COVID-19 outbreak in China, a country that accounts for about 4% of its overall sales. General Mills operates 470 Häagen-Dazs ice cream shops there that were hit hard when restaurants shut down.

But the arrival of the virus in the U.S. stands to have a larger effect on the firm. About 60% of General Mills' sales happen in North America. And in the U.S., the company primarily sells packaged, center-of-store foods — like cold cereal, canned soup and granola bars — that are being purchased at much higher rates by people who are stockpiling.

The company earned $454 million in the quarter ended Feb. 23, marking a 2% increase over a year ago, amounting to diluted earnings per share of 77 cents.

Sales fell 1% to $4.18 billion, slightly missing expectations of Wall Street analysts.

General Mills stock fell 3% on Wednesday, a day when the broader market dropped 5%.

The company raised guidance for its full 2020 fiscal year, which ends in May, on the increased orders from retailers in North America and Europe. Executives now expect constant-currency adjusted operating profit to increase 4% to 6%, up from the previous range of 2% to 4% growth.

Kristen Leigh Painter • 612-673-4767