General Mills to sell its North American yogurt business, including Yoplait, for $2.1 billion

General Mills is selling its North American yogurt business — including its once dominant Yoplait brand — for $2.1 billion after years of weakening sales and eroding market share.

The Golden Valley-based packaged food giant helped bring yogurt to the American masses in the late 1970s with Yoplait. But by the early 2010s, Yoplait went into a long-term decline as new yogurt varieties, particularly Greek style, muscled their way into the dairy aisle.

General Mills announced Thursday it will sell its U.S. yogurt business to Lactalis and its Canadian yogurt business to Sodiaal; both buyers are French companies. General Mills had been shopping its yogurt business since at least this spring.

The sale includes brands Yoplait, Liberté, Go-Gurt, Oui, Ratio and Mountain High, as well as manufacturing facilities in Murfreesboro, Tenn.; Reed City, Mich.; and Saint-Hyacinthe, Québec.

General Mills’ North American Yogurt business contributed about $1.5 billion to the company’s net sales of $20 billion in fiscal year 2024, or about 7.5%. That’s down from fiscal year 2020, when the same business tallied $2.01 billion in revenue, 11.7% of total sales, federal securities filings show.

General Mills “was not a leader in the yogurt category, which has been challenged by slowing growth and intense competition,” Matt Arnold, an analyst at Edward Jones, wrote in a research note Thursday. “We view the deal as a positive, and it is largely in line with our expectations.”

Other analysts agreed, saying the sale allows General Mills to better focus on faster-growing and more profitable brands and businesses.

“Not only is yogurt a challenging category to play in, [profit] margins are both volatile and tend to be below company average,” Bryan Spillane, an analyst at Bank of America Securities, wrote in a report.

General Mills says it intends to use proceeds from the deal for share repurchases.

This yogurt sale is a key step in the company’s portfolio reshaping — which is industry parlance for making over its mix of brands and products.

“Upon completion of these divestitures, we will have turned over nearly 30 percent of our net sales base since fiscal 2018,” General Mills Chief Executive Jeff Harmening said in a news release.

That turnover includes the sale of well-known but stagnant stalwarts — Hamburger Helper and Green Giant canned and frozen vegetables — along with the purchase of Blue Buffalo, a fast-growing pet food company.

Harmening added that the company is focused on its brands with the greatest global potential as well as customer favorite “gem brands” at the local level, which have a better prospect for growth and larger profit margins.

General Mills declined to comment on how many headquarters employees will be affected by the sale. Some employees will be offered employment with the new owners, or they will support the yogurt business during the transition, before being eligible for other jobs at General Mills, the company said.

The decline of General Mills’ yogurt business is a textbook case of a company failing to adequately counter innovation in a core product line.

“Twenty years ago, General Mills’ U.S. yogurt business was the pride of [its] portfolio, enjoying rapid growth and high margins, second only to [its] U.S. cereals business,” Alexia Howard, an analyst at Sanford Bernstein, wrote in a report Thursday.

“But General Mills was either late to market or mis-executed around some key innovations pioneered by others in the space,” she said.

The company struggled to regain significant, consistent growth as consumer demand for yogurt started plateauing at the same time as the emergence of Greek-style yogurt.

The rise of Greek mass market pioneer Chobani in the early 2010s jump-started a yogurt war. The incumbents, Danone and General Mills, faced a decade of intense competition with new rivals popping up with new takes — from sheep’s milk and ultrafiltered yogurts to Icelandic, German and Australian-style varieties.

General Mills threw innovation at its yogurt business with a string of new products and brands, such as Oui (creamy French-style yogurt in petite glass jars). Some of these efforts worked, stymieing losses and regaining some growth — while some didn’t.

The yogurt deal marks a return to roots for the Yoplait brand, which started in France in 1964. General Mills has distributed it in the U.S. since 1977 and has owned a controlling stake in the brand since 2011.

The buyer of General Mills’ U.S. yogurt business, Lactalis, says on its website that it is the largest dairy products company in the world. Lactalis, whose brands inlcude Siggi’s, Stonyfield Organic and Brown Cow, has a 7% share of the the U.S. yogurt market, Howard wrote.

General Mills has a 13.7% share, but Howard doesn’t expect a major problem with antitrust regulators as some smaller brands owned by the two companies could be sold off if needed.

Sodiaal is France’s leading dairy cooperative. General Mills sold the controlling stake in its European Yoplait business to Sodiaal in 2021.

“In Lactalis and Sodiaal, we believe we’ve found the right homes for these businesses, with dairy-focused owners who are well equipped to drive success for our people and growth for these brands into the future,” Harmening said in a press release.

General Mills stock closed Thursday at $73 a share, down 12 cents.

The yogurt sale is a cash transaction and is expected to close in 2025. After closure, General Mills expects the deal to negatively impact its earnings per share by roughly 3% in the first 12 months.

Star Tribune business editor Kristen Painter contributed to this report.