General Mills Says Demand Changing by the Week Amid Outbreak

General Mills Inc. reported its 2020 third quarter fiscal results on Wednesday, during which the company stated it expects demand for some of its products to rise as consumers across the world stock up on food at home during the ongoing COVID-19 pandemic, while other brands will be hurt by the closing of retail stores.

The Minneapolis, MN-based company — which had flat total and organic sales of $4.2 billion during its Q3 that ended Feb. 23 — said it expects greater demand for food at home, primarily impacting GM’s North America retail, Europe and Australia segments.

iStock“While it is still early, we have seen increased customer orders and higher retail sales takeaway in Nielsen-measured channels since the beginning of March,” GM chairman and chief executive officer Jeff Harmening said in the company’s Q3 conference call with analysts. “Our US retail sales results for the week ended March 7 were up low double-digits, including Pet, and we anticipate takeaway for the week ending March 14 will be many times higher across all channels. While we assume this short-term stock-up demand will ebb in the coming months. Our expectation is that overall at-home food demand will remain elevated in Q4 and the bulk of any unwind will happen in fiscal ‘21.”

GM — which has numerous household brands of baking, cereal, soup and other food products — didn’t give specific percentages for product categories, but expects Q4 organic sales “to step up significantly,” driven by improved performance in North America retail, as well as an extra month of results in Pet.

“Over the next couple of months, it’s very clear to us that restaurant traffic will be down. It’s very clear to us that schools and university feedings will be down. And that consumption is going to shift to at-home,” Harmening told analysts Wednesday. “And so those are the trends. I mean, we don’t have a lot more insight than you do in terms of the data, but those trends are clear to us and that at-home food is going to be higher.”

Meanwhile abroad, Harmening said that nearly half of GM’s Haagen-Dazs shops in greater China have been temporarily closed, and that the company saw a 90 percent decline in traffic in shops and substantial declines in other foodservice outlets in China in February, resulting in a significant reduction in Haagen-Dazs sales in Asia for the month.

Harmening added that GM has taken steps to limit its employees’ exposure to the virus while continuing to operate the business, including encouraging social distancing practices and requiring those who can to work from home through at least April 1. GM has also restricted business travel and visitors at its facilities.

“During the rapidly evolving situation related to COVID-19, our number one objective continues to be the health and safety of our consumers, employees and other stakeholders,” Harmening said. “General Mills plays a critical role in making food to meet the needs of our consumers, and I’m proud of the way we’ve partnered with our retail customers in recent weeks to service consumers’ increased demand for food at home during this unique time. Looking forward, we’ll remain agile to adapt to changing demand patterns around the world as circumstances with COVID-19 continue to develop.”