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February 19, 2020

General Mills’ Haagen-Dazs ice-cream operation in China hit by coronavirus

US food major General Mills risks seeing its sales decline in Greater China after reporting the potential impact from the coronavirus outbreak.

By Dean Best

US food major General Mills risks seeing its sales decline in Greater China after reporting almost half of its Häagen-Dazs ice-cream shops have been temporarily closed due to the coronavirus outbreak.

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While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
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China is relatively small in terms of its 4% contribution to the New York-listed firm’s group sales, but General Mills said in a statement that “because of the evolving nature of the situation, we are not able to quantify the financial impact of the outbreak on our fiscal 2020 results at this time”.  

Coronavirus broke out in the Chinese city of Wuhan, the capital of Hubei province, late in December and has since spread to around 29 countries. In China, more than 72,000 cases have been reported so far and more than 1,800 deaths. 

Minnesota-based General Mills added that its remaining Häagen-Dazs ice-cream stores are “operating under severely restricted hours”. About 40% of its 4% net sales in Greater China come from the Häagen-Dazs shops and other foodservice outlets, it said. 

“During the rapidly-evolving situation related to the coronavirus outbreak in China in recent weeks, General Mills and our China team have prioritised the safety of our consumers, employees, and other stakeholders by following government and health organisation guidance regarding safety precautions,” the Yoplait yogurt owner said.

The announcement was made in conjunction with a presentation at the Consumer Analyst Group of New York (CAGNY) investor conference yesterday (18 February) where General Mills reaffirmed its financial guidance for the year ending on 31 May.

Organic net sales are expected to increase 1% to 2% percent. “The combination of currency translation, the impact of divestitures executed in fiscal 2019, and contributions from the 53rd week in fiscal 2020 are expected to increase reported net sales by approximately one percentage point,” it said.

Constant-currency adjusted operating profit is projected to rise 2% to 4%. 

Related Companies

Free Whitepaper
img

What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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