Big food and beverage brands are not doomed to lose market share, but they must continue to innovate, said General Mills’ recently-named COO Dana McNabb at the Barclays 19th Annual Global Consumer Conference on Tuesday.
The same goes for legacy products versus new brands to the market, McNabb said.
The winning strategy is whether “you understand what the consumer values, and have you improved your remarkability to beat the competition that’s out there, and when you’re focused on that, you will see the results,” she said.
The presentation comes about two weeks ahead of the Minneapolis-based global food giant’s Q1 earnings report set for Sept. 23, where General Mills is expected to announce a strong first quarter.
“We really are encouraged by the first quarter and the momentum we have … especially on the top line,” said Chairman and CEO Jeff Harmening, who explained that General Mills plans to continue improving organic growth in fiscal year 2027.
General Mills’ three-pronged strategy
General Mills started the fiscal year with three strategies – strengthen organic growth, accelerate transformation and maintain discipline on capital allocation, Harmening said.
The company aims to drive organic growth largely through $3 billion in cost cuts over the next four years, $750 million of which will take place in fiscal year 2027, General Mills said in July.
Innovation is also on the agenda for General Mills, McNabb explained.
“If you think about a stressed consumer, changing food values, increases in GLP-1, inflation, geopolitical – you name it, we have faced it,” she said. “But what we want everyone to understand is, in the face of all these challenges, General Mills is not standing still. We are making significant changes to address the changing food landscape and to make sure that we’re serving consumers.”
The company also is transforming through innovation, McNabb explained. That includes new-product development, such as functional varieties for some of its flagship products like Honey Nut Cheerios Protein, which was released in June.
McNabb added that the innovation extends to General Mills’ plan to reimagine and streamline its supply chain.
“That entire effort is about improving our margins, reducing our leverage, accelerating our cash flow and really giving us more strategic flexibility,” she added.
Stock buybacks ahead?
The third leg of General Mills’ three-pronged strategy focuses on discipline with capital, meaning the company will prioritize long-term goals ahead of short-term gains.
That means avoiding acquisitions and stock buybacks, and instead directing the money to debt reduction.
The company has paid dividends for 98 years without interruption, and that’s not expected to change, Harmening explained. He noted that General Mills will consider acquisitions, but noted “there is a very high bar in this environment.”
Stock buybacks are also unlikely in the short-term, he said.
General Mills is also selling unprofitable parts of its global business, such as the recent sale of its business in Brazil, which includes local brands such as Yoki and Kitano, to Três Corações, a market leader in the Brazilian coffee market.
General Mills sticks to its targets
General Mills is sticking with its guidance for the remainder of the company’s current fiscal year, which runs through July of 2027, according to a same day press release.
That guidance anticipates:
- Net sales decline of 1.5% to 0.5%.
- Adjusted operating profit decline of 8% to 13% in constant currency, which strips out exchange rate fluctuations.
- Adjusted diluted earnings between $3.00 and $3.20 per share.
“After strengthening our foundation last year, our goal in fiscal 2027 is to accelerate our momentum by helping our brands stand out even more with consumers,” said Harmening. “We’re encouraged by the early signs we’re seeing in the market, including improving retail sales trends and positive consumer response to our innovation efforts. While we still have important work to do, we believe the business is moving in the right direction, and we’re confident in our plans to drive more consistent, profitable growth over time.”
