As the grocery store’s yoghurt aisle gets more crowded, General Mills’ Yoplait brand is having a hard time standing out among lower-priced and more innovative options, and plummeting sales of one of its core brands underscore its struggle to adapt to changing consumer tastes.
General Mills shares fell 1.1 per cent after it reported a wider-than-expected drop in revenues during the quarter ending February 26. While the Minneapolis-based company slowed the decline of cereal sales to just 1 per cent, deep losses in its yoghurt and meals and baking divisions led to a 5 per cent net sales decrease to $3.79bn. Analysts had expected sales of $3.8bn.
The maker of Cheerios and Cinnamon Toast Crunch cereals has sought to overcome consumers’ changing tastes by shifting into protein-rich foods and grain-based snacks. However, greater competition and gaps in pricing and promotions hampered sales in the quarter.
Yoghurt sales declined a staggering 20 per cent after a lack of promotional activity against its top competitors, said chief operating officer Jeff Harmening. “As previously discussed, we have work do to,” he told investors.
The company has seen double-digit growth within its natural and organic yoghurt offerings. However, losses in its core Yoplait division offset gains elsewhere, despite its redesign and new Greek product line.
Overall, North American retail, which makes up two-thirds of revenue, shrunk 7 per cent in the quarter, compared to the period in the previous year. Sales in Europe and Australia fell 3.4 per cent, though its operating profit there increased 25 per cent.
Chairman and chief executive Ken Powell said: “We’ve added support in the fourth quarter to strengthen key business lines, and we’re pursuing global growth priorities that will further improve our sales trends beyond fiscal 2017.”
The company now expects revenue for the full year to slide roughly 4 per cent, compared to its previous forecast of a 3-4 per cent decline.