General Mills has wiped out any prospect of organic sales growth this year as volumes take longer to recover than anticipated amid a challenged consumer.
The US-based manufacturer of snacks, breakfast cereals and pet food is resting its laurels on innovation, particularly in protein, fibre, health and weight management, to drive incremental sales and restore volumes.
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However, management presented a downbeat forecast for organic revenue and operating profit for fiscal 2026 at the Consumer Analyst Group of New York (CAGNY) annual conference yesterday (17 February).
A pre-event statement cited “weak consumer sentiment, heightened uncertainty, and significant volatility” for the new assessment.
Already into its third quarter, General Mills’ chairman and CEO Jeff Harmening revised the outlook for sales and operating profit lower, making the Pillsbury and Blue Buffalo brand owner’s longer-term targets a distant phenomena.
“We remain confident that enhancing the remarkability of our brand is the best path to restoring consistent and profitable organic sales growth,” Harmening said in his presentation.
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General Mills said yesterday before the live CAGNY session got underway that it now expects 2026 organic sales to fall by 1.5% to 2%. The previous forecast in December was for a range of down 1% to up 1%.
In the worst-case scenario, the new forecast would match the 2% decline in fiscal 2025.
The most recent volume data, issued in December, showed second-quarter volumes were nine percentage points lower than the corresponding period and were down eight points over the six months.
Meanwhile, General Mills said yesterday that both adjusted operating profit and adjusted diluted EPS are expected to be down 16% to 20% this year, compared to the December guidance range of down 10% to 15%.
Both of those metrics decreased 7% in 2025.
Over the longer term, General Mills is aiming for organic growth of 2-3% and a mid-single-digit progression in adjusted operating profit.
CFO Kofi Bruce gave some insight during his CAGNY presentation.
“While our long-term expectation is for our categories to grow between 2% and 3%, what we’re seeing in the current environment is aggregate category growth that is a little bit less than 1%.
“We think about a point of that difference has been driven by reduced price/mix stemming from the current consumer value-seeking behaviour, and we estimate that about half a point is from consumption-related headwinds, including lower population growth in the US, as well as increased adoption of anti-obesity medications.”
Harmening said General Mills expects to deliver around a 25% increase in net sales from new products in fiscal 2026, all around what he called “mega-trends”.
He quantified those as: changing demographics in the US around an ageing population; a rise in Hispanic consumers; a heightened focus on value; health and wellness; weight-management priorities; humanisation in pets; AI and digital integration.
“We expect GLP-1s and other anti-obesity medications to have a lasting influence on the food and nutrition landscape, nudging some consumers to smaller portions and more nutrient-dense, protein and fibre-forward foods,” Harmening said.
“Our goal is to ensure that our innovation agenda, portfolio, choices and capability investments align to these macro trends. At the same time, we will continue to respond to near-term value pressures and remarkability and precision, category by category and brand by brand.”
