General Mills (GIS) , which owns large food brands such as Cheerios, Lucky Charms, Pillsbury, Häagen-Dazs, etc., has noticed a startling change in customer behavior, and the company is sounding the alarm on the root cause of the problem.
General Mills’ third-quarter earnings report for fiscal year 2025 revealed that its net sales during the quarter were down by 5% year-over-year. Specifically in the U.S., retail sales declined by 7%, with morning foods, snacks, meals and baking solutions all facing a decrease in sales.
This shrinkage in sales contributed to General Mills’ operating profit, which is a company’s profit after paying operating expenses, to decline by 2% year-over-year.
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General Mills CEO nails down what’s causing shrinking sales
During an earnings call on March 19, General Mills CEO Jeffrey Harmening flagged that the company noticed that customers were pulling back on snacking more than they did during the 2008 recession.
“Food at home is now elevated vis-a-vis what it was in 2008,” said Harmening during the call.
He also said that the number of customers opting to prepare food at home increased during the COVID-19 pandemic, and now that the pandemic is over, that number has spiked even more.
Chex cereal, owned by General Mills, is lined up on shelfs at a grocery store.
Image source: Shutterstock
“Pre-pandemic food-at-home consumption was about 83% of occasions,” said Harmening. “It is now 87% and has been 87% for a long time. And so, what has changed is that in prior periods like we’re experiencing now with consumer confidence, we had a lower percentage of people eating at home, and that increased as they got more anxious.”
Many consumers across the country have indeed been shifting their focus on cooking food at home amid inflation and higher costs of living. According to a recent survey from The Harris Poll and Flashfood, 81% of Americans said saving money on food is a priority for them this year.
Also, 89% of Americans in the survey believe that cooking food at home doesn’t just have cost-saving benefits, but it is also healthier.
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Many Americans have also recently been cutting processed foods out of their diets. A recent survey from the International Food Information Council found that 63% of Americans avoid processed foods, while more than half follow a vegan, vegetarian, or plant-based diet in an effort to be healthier.
During the call, Harmening also noted that consumers have become more “value conscious” and are scaling back spending on discretionary items at grocery stores.
“If you look at the rest of the grocery store, you would see that things that are staples are the ones that are growing faster than things that are more discretionary,” said Harmening. “And so, staples like baking staples, for example, and some of the items on the perimeter, those are growing faster because they produce more value.”
General Mills unveils grim outlook on future sales
Amid this concerning trend, Harmening said that General Mills will focus on emphasizing the value of its products to win back customers, and that doesn’t mean solely focusing on lowering prices.
“It really is about getting the value right,” said Harmening. “And beyond that, it really is about talking about the benefits of our products. In some cases, that’s functional benefits like protein. In other places, like Pillsbury biscuits, it’s about how flaky they are. When it comes to Betty Crocker, maybe how chocolaty they are. So, it really depends brand by brand, the benefits they’re looking for.”
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General Mills is expecting its organic net sales for the first quarter of this year to decline by 1.5% to 2% after previously expecting sales to be flat or up by 1%. The company is also expecting its operating profit to shrink by 7% to 8%.
General Mills’ grim outlook on sales comes at a time when it is facing a significant boycott threat from consumers.
The People’s Union, which has planned “economic blackouts” and boycotts of companies such as Amazon, Walmart, and Nestle this year, has a General Mills boycott scheduled between April 21-28.
The organization, which has gone viral on social media, has been targeting large companies it believes have allegedly harmed consumers through corrupt practices.
“Mega corporations have driven up prices, underpaid their workers, and outsourced jobs while raking in record profits,” said The People’s Union on its website.
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