During their presentation at the Barclays Global Consumer Staples Conference on Sept. 6, General Mills executives gave an update on the company’s pet food segment, including Blue Buffalo.
“As in human food, retail sales trends in the U.S. pet food category have been moderating recently, driven in part by less impact from pricing,” General Mills stated in a press release. “With U.S. pet parents increasingly cautious about their economic outlook, some have been shifting toward more value-oriented products and channels as well as smaller pack sizes. In addition, pet parents spending more time away from home has negatively impacted the treats and wet food segments of the category. As a result of these more challenging category dynamics, the company now expects first-quarter fiscal 2024 Pet segment organic net sales to be roughly flat versus last year and segment operating profit margin to be approximately 19 percent. While Pet segment volume trends are expected to remain challenged in the months ahead amid a more difficult short-term U.S. pet food category dynamic, the company continues to see strong long-term growth opportunities for Blue Buffalo as the multi-decade trend toward humanization continues.”
General Mills acquired Blue Buffalo for approximately US$8 billion in March 2018. In 2021, General Mills purchased Tyson Foods pet treats business for approximately US$1.2 billion. General Mills pet segment’s annual revenue reached US$2,300,000 in 2022, according to Petfood Industry’s Top Companies Current Data.
“We entered fiscal 2024 with a sharp focus on the evolving external environment, headlined by moderating inflation, stabilizing supply chains, and a resilient but increasingly cautious consumer,” said General Mills Chairman and Chief Executive Officer Jeff Harmening said about the company overall in a press release. “As we navigate this dynamic landscape, we remain committed to executing on our key priorities for this year, which are to continue to compete effectively, improve our supply chain efficiency, and maintain our disciplined approach to capital allocation. We will continue adapting to the changing environment, and we remain on track to deliver our fiscal 2024 financial objectives.”
General Mills pet segment up 9% to US$2.5 billion in FY23
In the fourth quarter of fiscal year 2023, net sales increased 7% to US$655 million for General Mills’ pet foods, treats and other pet segment products. The company reported its most recent financial data on June 29, covering both the current quarter and all of fiscal year 2023. General Mills’ organic net sales were also up 7%. Dry pet food net sales increased by double digits. Pet treat sales went up by high single digits. However, wet pet food net sales declined by high-single digits. General Mill’s pet segment operating profit increased by 18% to US$133 million. This growth was driven primarily by favorable net price realization and mix, and cost savings, partially offset by input cost inflation, higher SG&A expenses, including a double-digit increase in media investment, and higher other cost of goods sold.
In fiscal year 2023 overall, General Mill’s pet product net sales increased 9% to US$2.5 billion with organic net sales up 9% too. Net sales were up double digits for dry pet food and pet treats and were flat for wet pet food. Segment operating profit was down 5% to US$446 million, driven primarily by higher input costs, higher SG&A expenses, and lower volume, partially offset by favorable net price realization and mix.
Overall, General Mills expects the most significant factors impacting its performance in fiscal 2024 will be the economic health of consumers, the moderating rate of input cost inflation, and the increasing stability of the supply chain environment.
General Mills may close plant acquired from Tyson Foods
In May, Manufacturing Dive reported that General Mills plans to shutter a production facility in Independence, Iowa, USA by the end of 2023. The plant produces Top Chews and Nudges treats. General Mills acquired those brands from Tyson Foods in 2021. The closure will affect 250 employees, and a General Mills spokesperson said the company would provide career services and benefits support for these individuals. The spokesperson said the closure would not affect pet food and treat plants in Joplin, Missouri and Richmond, Indiana.
