General Mills (GIS) is launching healthier products and revamping and promoting its existing ones to revive sales that have slipped for three straight quarters.
The company is jumping into an increasingly crowded market for healthier foods. But the industry has little choice as long-standing brands lose ground to cheaper store brands. "Consumers today are seeking more protein at breakfast, and we are responding," Chief Executive Officer Ken Powell said on a post-earnings conference call Wednesday.
General Mills has launched protein-based Nature Valley granola bars and Cheerios cereals and has struck a deal with McDonald's (MCD) to have its Yoplait yogurts offered with Happy Meals in thousands of outlets from next month.
Rival ConAgra Foods (CAG) has said that its Healthy Choice frozen meals and soups continued to face challenges and substantial volume decline in the third quarter ended Feb. 23. Kraft Foods (KRFT), Kellogg (K), Unilever (UL) and many other large food companies have also taken steps as health-conscious consumers lose their taste for highly processed foods.
Cutting Costs in the Supply Chain
To cut costs, General Mills said it was reviewing its North American manufacturing and distribution network with a view to save $40 million pretax in the year ending May 2015. The company said savings from an ongoing cost-cutting program in its supply chain are expected to exceed $400 million in 2015.
General Mills said it expected net sales to grow at a mid-single-digit percentage rate in fiscal 2015, with adjusted earnings per share growing by high-single digits.
%VIRTUAL-article-sponsoredlinks%Sales in the company's U.S. branded goods retail business, which accounted for 60 percent of revenue in the year ended May 25, fell 1 percent to $2.4 billion in the fourth quarter. The division's brands include Green Giant vegetables, Progresso soup and Pillsbury frozen foods.
Sales in the company's international business -- its second-largest division, including Old El-Paso Mexican foods and Haagen-Dazs ice-creams -- fell 7 percent to $1.3 billion.
Net sales fell 2.9 percent to $4.28 billion. Analysts had expected sales of $4.42 billion. Net income rose 10.4 percent to $404.6 million, or 65 cents a share from $366.3 million, or 55 cents a share, a year earlier.
Excluding items, earnings were 67 cents per share. Analysts had expected 72 cents a share, according to Thomson Reuters I/B/E/S. One-time items include a 6 cents a share gain from the sale of several grain elevators and a 9 cents a share charge associated with the devaluation of Venezuela's currency.
10 Strange and Sneaky Supermarket Savings Strategies
General Mills Goes Big for Healthier Products
This may seem distasteful, as many Americans believe it unsafe to eat marked-down meat close to its sell-by date. The truth is, supermarket chains mark down meat up to 75 percent several days before the sell-by date. If you're prepared to cook (or freeze) the meat as soon as you get it home, there should be no problem. Naturally, look at it and smell it when you get home. If you have any doubt, toss it. And don't buy meat after the sell-by date. I have been buying meat this way for several years with nary a problem. Two good websites can help quell your unease about this: stilltasty.com (which also has an iPhone app) and eatbydate.com.
Before Thanksgiving is the best time to pick up frozen turkeys. I always buy two, one for Thanksgiving and one for Christmas. Just before St. Patrick's Day is often the best time to buy corned beef, and hams are rarely cheaper than before Easter.
As well you know, after a holiday, stores mark down the Easter candy, the Christmas gifts and the Passover and Hanukkah fixings. These are great opportunities to pick up foodstuffs that usually only grace holiday tables, to enjoy at other times.
Often, stores anticipate greater demand for ethnic foodstuffs than their patrons deliver. Take advantage of your neighbors unadventurous palates by exploring the world of flavors available at the local grocery store. Alternatively, if you are lucky enough to have an ethnic grocery store near you, many unusual foods will be substantially cheaper than at chain supermarkets. I love to go to ethnic grocers; not only do they offer samples of unfamiliar foods, but people are generally willing to explain what to do with these new (to me and you) items. Also, seafood can be considerably cheaper. Last weekend, live Maryland blue crabs were $3.99 a pound -- that's cheap even in Maryland. And you can buy fish heads and other cuts of fish to flavor stocks and chowders.
Most stores with bakeries bake more than customers will buy. One store near me always has a section of not-as-fresh breads and sweet items 50 percent off. At these prices, those are often more cost-effective than homemade.
At the back of the store, groceries hide shelves of dented or unlabeled cans and smushed boxes -- but there's nothing wrong with the contents. A few months ago, I bought a case of pasta at 11 cents a box. In some towns, small stores buy the dented and older inventory of the chains. The main caveat for dented cans is never buy a can that is bulging or that is punctured or pierced; both can signal dangers such as botulism.
Store usually just want to get rid of these unpopular items, and they may never been seen again. Sometimes, they are products discontinued by the manufacturer. They seem to be more frequent in the frozen food aisle, in my experience.
Milk or butter are rarely marked down, but sometimes stores have gourmet cheeses at half-price. With good cheeses often going for more per pound than high-end cuts of beef, this is a fine thing for cheese lovers.
With prices for some produce also running as high per pound as meat, it's good to know that some stores mark down their uglier, older fruits and vegetables. While those may not be pretty enough for a star turn at the table when you're entertaining guests, they're more than good enough for supporting roles in stews, sauces, soups, compotes and cobblers. You can also be bold and ask -- in a nice way -- what happens with this unlovely produce and see what that gets you.