US-based cereal-to-yoghurt group General Mills has indicated that it sees a “significant” opportunity to grow its business by expanding its reach in the international cereals market.
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Posting a 51% jump in profit this morning (23 September), General Mills said that growth had been driven by improved margins and growth of its retail sales in the US.
However, the group’s international performance was weaker, with sales dropping 4% to $662m. Foreign exchange weighed on the group’s performance, with the strength of the dollar stripping 9% from international sales.
International segment operating profits declined 13% to $70m, the company revealed.
However, speaking during a conference call with analysts, CEO Ken Powell said that the group saw “decades of growth” in the international cereal category, which has become larger than the domestic cereal market.
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By GlobalDataAccording to Powell, international cereal sales were depressed during the quarter due to the economic downturn.
“Typically the cereal category outside the US will grow 2% or 3% year-over-year. I’d say the last year and a half its been closer to 1%, 1.5%. So it is down a little bit,” he revealed.
However, he emphasised, CPW is still generating “good top line growth” and growing its market share.
“From memory our share was up in seven or eight in our top ten markets. There has been a little bit of an impact in this current economic environment on the cereal category outside the US. But again it is still growing and it is still a category where when you look at the penetration of this category compared to what it is in US there is just huge upside to continue to grow penetration.
“I think we have decades of growth to look forward to in the international category and CPW is very well positioned to grow and to continue to capitalise on that market,” he said.
