Summary
Reporting a recent surge in profits, General Mills cited cereal sales as one strengthened area, and a company spokesman pointed to the end of the Atkins diet era and the beginning of a whole grain food craze as contributing factors.
Original source:
http://moneycentral.msn.com/inc/news/providerredir.asp?feed=FT&Date=20050922&ID=5135293
Details
- General Mills said on Thursday it was seeing the "most positive tailwind in cereal in years" as consumers abandoned Atkins-style diets and started to embrace whole grain-based foods.
- The comments by Steve Sanger, chief executive, came as the second largest US cereal maker reported a 38 per cent rise in first-quarter profits, driven by strong sales of its Yoplait yoghurt and Progresso soup business.
- Such sales offset a decline in cereal shipments as General Mills misjudgedconsumers' willingness to accept recent price rises, prompting shoppers todefect to cereals made by rival Kellogg and own-brand cereals from retailers.
- Mr Sanger said: "Our problem was we got our [prices] a little high and we had to bring them back in line.
- We had a decline in cereal shipments that was offset by price realisation on cereals, so our overall cereal sales were flat."
- But he said the cereal category was growing strongly.
- "That's partly a reflection of the end of the Atkins [diet] mania and the introduction of whole grains.
- Food companies in the US, especially cereal makers, have been stepping up the introduction of whole grains into their product portfolios in the wake of new dietary guidelines introduced this year by the US government.
- "It has curried favour from retailers through its pricing decisions and innovation."
- General Mills shares rose 1.5 per cent on Thursday to $45.40 after it said quarterly net income had risen to $252m, or 64 cents a share, compared with $183m, or 45 cents, a year ago.
- Sales rose 3 per cent to $2.66bn.
- Mr Sanger said price increases were "still attainable in this business" in spite of the uncertainty over the future direction of energy and commodity costs.
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