General Mills’ volume challenge persists but bullish on progress

General Mills is optimistic its investment programme to restore volume growth will improve through the fiscal year after another testing quarter.

Sales dropped across the US food group’s portfolio in the opening quarter of fiscal 2026, with the largest of its regional segments – North America retail – leading the decline in volumes on a reported basis.

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While sales and volumes have been pressured by the disposal of yogurts in the region, chairman and CEO Jeff Harmening reiterated this week that the priority for the Nature Valley snack bar maker is “returning to profitable organic growth”.

Harmening said in prepared remarks to accompany the three-month results to 24 August that management is “increasingly confident that our approach is working” as General Mills invests to support volumes and drive innovation around what he described as “remarkability”.

Profit results were “pressured significantly” in the fiscal 2026 first quarter as a consequence of the stepped-up investments and the yogurt divestiture, and that pressure is expected to continue in the subsequent quarter.

“Importantly, [profits] will improve in the back half of this year, certainly in Q4, but throughout the back half of the year,” Harmening said.

He added: “So far, so good. We strengthened our pound share in eight of our top 10 categories and now we’re holding pound share in pet.

“Price remains an important tool, especially in today’s environment, but it is not sufficient to drive lasting growth. Sustainable, profitable growth comes from making sure that all elements of remarkability – product, packaging, messaging, omnichannel execution, and value – truly resonate with consumers.”

General Mills’ reported volumes fell eight percentage points across the group in the quarter in reported terms, with price/mix a positive one point. North America retail saw a 16-point decline and the international business a two-point drop.

North America pet volumes were up one, while the foodservice division in that region was down two.

Group reported sales and organic revenues for the Cheerios cereals owner were down 7% and 3%, respectively, at $4.5bn from the same quarter of fiscal 2025.

Dana McNabb, General Mills’ president for retail and pet in North America, stepped in during this week’s Q&A session to field a question on how the company is now balancing price, volumes and promotions.

“As we shifted to this fiscal year, our focus has been on adjusting our base shelf price, trying to get below key cliffs, or to make sure that we have a gap that’s manageable to the competition,” McNabb said.

“We need to do this across two-thirds of our portfolio, and we got the majority of that done in Q1, and results are ahead of what we expected. We will complete the remainder of the base-price adjustments in Q2.”

McNabb added that once pricing adjustments have been made, General Mills will raise its game on innovation, especially around enhanced protein products such as snacks and bars.

“We’re moving from about 3.5% of net sales on new products to 5%,” she said, noting that General Mills’ household penetration rates in North America retail grew across the portfolio for the “first time since fiscal ’22”.

Snack bars, both fruit and salty snacks, and cereals were pointed out.

“Making sure we have manageable gaps relative to the competition, that was a driver of that penetration improvement. But also, it’s not a coincidence that where we had a great remarkability approach, where we had good advertising, really good new product innovation, or product quality, price pack architecture, that is where we saw the best results,” McNabb said.

Swerving to the US government’s efforts to cut additives and colourings from foods, Harmening stressed General Mills’ historical efforts and progress on elimination but also took a swipe at the fractured nature of the approach at a local level.

“There are a lot of state regulations being brought up now and I think there’s a challenge in that,” he said. “And it’s a challenge really for consumers because there’s a cost associated with trying to do something state by state, rather than a federal level. Ultimately, consumers will pay the cost for that.

“I think there’s a challenge for the whole industry with a state-by-state approach. And it’s certainly not just our challenge. And ultimately, I think it’s better if we can get to something that’s consistent on a federal level.”

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