US food group Ralcorp Holdings today (21 June) admitted some of its cereal promotions had failed to hit the mark as the Post maker deals with a fiercely competitive category.
Earlier today, Ralcorp said third-quarter earnings would be down on its previous fiscal year and blamed competition in the US cereals sector for affecting both its branded Post business and the own-label cereals made by its Ralston Foods division.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Ralcorp shares fell in the wake of the profit warning despite the company announcing three acquisitions, including that of pasta supplier American Italian Pasta Co.
The company said it realised during its third quarter that its Post promotions were not giving the “lift and return” it expected.
“As we got further into the third quarter, a number of the promotional activities did not return on the level we expected,” co-CEO and president David Skarie said. “We’re continuing to evaluate the mix and the frequency of promotions.”
Meanwhile, Skarie said its Ralston Foods business had seen the gap in price between its own-label cereals and branded lines “narrow or disappear completely”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataSkarie warned that trading conditions in the US cereal sector looked set to remain competitive. “We do not see any material changes in the environment in the near future,” he said.
Ralcorp sells a range of private-label products – from cookies and crackers to frozen products – but Kevin Hunt, the company’s other co-CEO and president, played down fears the business was being affected by heightened promotional activity across its portfolio.
“We are seeing an increased number of promotions in a number of our categories but, on the other hand, the price gaps [with brands] have stayed constant,” Hunt said.
“Given that cereal is a destination category, it is probably the most intense that we’re seeing across our categories,” Hunt said.
