General Mills Faces Organic Sales Challenges Amid Consumer Sentiment Shifts
General Mills has eliminated the possibility of organic sales growth for this year, as recovery in volume sales takes longer than anticipated in a challenging consumer environment. This reflects broader trends impacting the food and beverage industry.
The company, known for its snacks, breakfast cereals, and pet food, is focusing heavily on innovation. With an emphasis on protein, fiber, health, and weight management, General Mills hopes to stimulate incremental sales and restore volumes.
At the recent Consumer Analyst Group of New York (CAGNY) annual conference, management projected a pessimistic outlook for organic revenue and operating profit for fiscal 2026. Drawing on a pre-event statement, they cited “weak consumer sentiment, heightened uncertainty, and significant volatility” as reasons for this revised forecast.
As General Mills moves into its third quarter, Chairman and CEO Jeff Harmening adjusted the company’s sales and operating profit outlook downwards, indicating that the long-term targets for the Pillsbury and Blue Buffalo brands appear increasingly distant. He stated, “We remain confident that enhancing the remarkability of our brand is the best path to restoring consistent and profitable organic sales growth.”
In an effort to modernize product development, General Mills is leveraging artificial intelligence. This approach includes using digital personas for better consumer insights, rapid prototype generation, and tools that expedite real-time feedback from consumers.
Before the CAGNY session commenced, General Mills announced its expectation for a 1.5% to 2% decrease in 2026 organic sales. This is a significant shift from the December forecast, which anticipated a decline of just 1% or potential growth of up to 1%. In a worst-case scenario, this forecast aligns with the 2% drop noted in fiscal 2025.
Recent volume data, issued in December, indicated that second-quarter volumes were nine percentage points lower than the previous year, and down eight points over the last six months.
Furthermore, General Mills reported that both adjusted operating profit and adjusted diluted EPS are predicted to decline by 16% to 20% this year, compared to a previous range of 10% to 15%. Both metrics already experienced a 7% decrease in fiscal 2025.
Looking ahead, General Mills aims for organic growth of 2-3% and a mid-single-digit progression in adjusted operating profit. During his presentation at CAGNY, CFO Kofi Bruce elaborated, stating, “While our long-term expectation is for our categories to grow between 2% and 3%, what we’re seeing in the current environment is aggregate category growth that is a little bit less than 1%.” He attributed part of this discrepancy to declining price/mix related to current consumer value-seeking behavior and estimated that half a point stems from consumption-related challenges.
Harmening conveyed optimism about achieving approximately a 25% increase in net sales from new products in fiscal 2026, citing alignment with key “mega-trends.” These include shifting US demographics due to an aging population, increasing Hispanic consumer presence, heightened focus on value, health, weight-management priorities, pet humanization, and advancements in AI and digital integration.
He elaborated, “We expect GLP-1s and other anti-obesity medications to have a lasting influence on the food and nutrition landscape, nudging some consumers to smaller portions and more nutrient-dense, protein and fibre-forward foods.”
His focus remains on ensuring that General Mills’ innovation strategies, product portfolio, and capabilities align with these macro trends, while also addressing immediate value pressures on a category and brand basis.
