General Mills was quick to raise prices in response to inflation and successfully navigated many supply-chain issues — all of which led to red-hot profits a year ago.
"We were on the shelf and private label wasn't," Jon Nudi, president of the company's North American retail division, told investors Wednesday.
Now the competition has caught up, eroding the Golden Valley-based company's market share in its largest business — for now, executives say.
General Mills kicked off its new fiscal year with old challenges as the company behind Totino's and Betty Crocker faced consumers who are "resilient but increasingly cautious," chief executive Jeff Harmening said.
"We're pleased with our performance, but that doesn't mean everything's perfect," Harmening told the Star Tribune on Wednesday. "The consumer is going to continue to be challenged."
Translation: Shoppers might continue choosing less expensive brands.
Sales continued to grow at General Mills this summer even as the company sold fewer pounds of food due largely to price increases. As inflation levels off — General Mills expects a 5% increase to its costs compared to 13% last year — and as consumers reach a breaking point with higher prices, the company will need to look elsewhere for continued growth.
"While for the most part consumers have been more resilient than previously thought, willingness to pay may be close to hitting a ceiling," said analyst John Oh at equity research firm Third Bridge.
