As “value-seeking” behavior remains persistent, General Mills is proactively investing in marketing and innovation to drive sales growth.
Admittedly, General Mills reported third-quarter sales that fell short of “expectations,” decreasing by 5% in organic terms. Now, nearly four weeks into the final quarter of the 2025 fiscal year, the company is targeting a reinvestment savings program to bolster its performance.
Following yesterday’s sales downgrade for the current year — down by 1.5% to 2% — Chairman and CEO Jeff Harmening committed to reinvesting $100 million from targeted savings in the 2026 financial year.
“We’re reviewing new cost-efficiency initiatives that are anticipated to generate at least $100 million in additional savings in fiscal ’26, with further savings expected in fiscal ’27 and beyond,” Harmening stated in his remarks yesterday (19 March).
“Our number one priority is to accelerate our organic sales growth by delivering remarkable consumer experiences across our leading food brands, resulting in stronger volume and improved market share performance.”
The owner of the Pillsbury brand is on pace to achieve 5% savings in cost of goods sold this year through the company’s Holistic Margin Management (HMM) program. Furthermore, they expect to replicate this in fiscal 2026, leading to over $600 million in “gross productivity savings,” according to Harmening.
However, General Mills has faced “softness” in the U.S. snacking category in its recent quarterly report. This includes declines in bars, fruit snacks, and salty snacks, compounded by “greater-than-expected retailer inventory headwinds” elsewhere. The CEO indicated that the consumer environment poses challenges ahead.
“Coming into this year, we thought the consumer environment would improve as the year progressed, but that hasn’t really been the case,” explained Harmening to analysts during the Q&A session.
“Consumers are still seeking value as much, or even more, than when our fiscal year began. Looking at the most recent confidence indices indicates that consumer confidence remains below levels from three months ago and is comparable to 2008.”
General Mills plans to enhance spending on innovation to provide “remarkable” consumer brand experiences, alongside increased marketing investment, aimed at improving organic growth.
Harmening acknowledged that the company’s new product innovation as a percentage of sales still lags behind pre-pandemic levels. The overarching theme for fiscal 2026 is likely to be “fewer but bigger.”
Additionally, General Mills must balance pricing across all categories as consumers continue to face economic pressures.
“We just have to get into a zone in which our pricing is going to work,” he articulated.
“Then we must consider all elements of our marketing mix, utilizing the remarkable experience framework to navigate this — category by category.
“I’m confident that as we approach the fourth quarter and into fiscal ’26, we have a much clearer understanding, category by category, of what needs to be accomplished. In some cases, that’s value; in others, it’s core marketing, and in some instances, it’s innovation.”
Analyst Robert Moskow from TD Cowen summarized: “We view GIS’ investments as an acknowledgment that they, along with other big-food companies, raised prices too high during the pandemic and need to reset the value equations (and their margins) across various categories,” he noted.
“Relying on consumers to adjust to cumulative inflation may not yield favorable results at a time when consumer confidence is declining, GLP usage is increasing, and government cuts to SNAP benefits are on the horizon.
“We anticipate several other big-food peers to follow suit in the coming quarters.”
