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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.
“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.