SeekingAlpha  11 hrs ago  Comment 
By Valuentum: There's not much out there that will surprise investors in General Mills (NYSE:GIS). However, the company has taken a major leap in scooping up Annie's (NYSE:BNNY) assets. The natural and organic food company had been trading off...
newratings.com  Sep 19  Comment 
WASHINGTON (dpa-AFX) - Packaged food company General Mills, Inc. (GIS) said in a regulatory filing that it would close two plants to cut costs, leading to elimination of about 680 positions. In the second quarter of fiscal 2015, the firm approved...
Wall Street Journal  Sep 18  Comment 
General Mills Inc. said it will close a cereal plant and a yogurt factory, eliminating up to nearly 600 jobs, as its first steps in a cost-cutting plan aimed at offsetting sluggish U.S. demand for cereal, cake mix and other packaged foods.
StreetInsider.com  Sep 18  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/General+Mills+%28GIS%29+Announces+Additional+Cost-Reduction+Initiatives/9845581.html for the full story.
DailyFinance  Sep 18  Comment 
The Law Offices of Vincent Wong are investigating potential claims against the Board of Directors of Annie’s, Inc. (NYSE:BNNY) (“Annie’s”) in connection with the sale of the Company to General Mills. Click here to...
Motley Fool  Sep 18  Comment 
These 3 catalysts that could push General Mills higher.
CNNMoney.com  Sep 18  Comment 
Apparently Americans are not eating their Wheaties.
SeekingAlpha  Sep 18  Comment 
By The Value Investor: Investors in General Mills (NYSE:GIS) were not pleased at all with a soft first quarter earnings report which was released on Wednesday before the market open. The results were quite soft, not just in my eyes but analyst...
Benzinga  Sep 17  Comment 
General Mills, Inc. (NYSE: GIS) reported its first quarter earnings on Wednesday. Shares of the company were down five percent. Below are some key highlights and takeaways from its conference call. Operations and General Remarks: •...
SeekingAlpha  Sep 17  Comment 
By Eli Inkrot: If you're talking about cereal, you're likely referring to the Kellogg Company (NYSE:K) or General Mills (NYSE:GIS). These two companies control roughly 60% of the market and their collective brands hold 9 of the 11 most popular...


General Mills (NYSE: GIS) is one of the largest packaged food producers in the world by revenue.[1] The firm owns some of the most recognizable brands in the grocery store, including Cheerios, Progresso Soup, Hamburger Helper, and Fruit Roll-Ups. U.S. retail accounts for 70% of sales[2], but its international segment, helped by a joint venture with Swiss food giant Nestle SA, is growing fast as the company now operates in more than 130 countries worldwide.

Like many other food and beverage companies, General Mills faces a market marked by increasing commodities prices. The company is a large purchaser of corn and wheat, and the rise in the price of oil has hurt as well. As the costs of doing business increase, General Mills must either absorb these losses or charge higher prices at the risk of losing market share. In doing so, the company has introduced new products like lower-sodium Progresso soups and Hamburger Helper singles for the microwave, while growing its reach from grocery stores into new channels like supercenters, drug and discount stores, and convenience stores. It is also expanding into fast growing markets like China, Russia and Latin America.[3]

Company Overview

The company divides its business into three core segments: U.S. retail, international, and bakeries and foodservice. The U.S. retail division is responsible for the vast majority of the company's profits and sales.

U.S. Retail (70.8% of Revenues, 83.6% of Operating Income)[4]

The company sells a line of "Big G Cereals," such as Cheerios, Total, Chex, Lucky Charms, and Kix. It also sells a number of "convenient dinner products," including Betty Crocker and Hamburger Helper dinner mixes, Progresso soups, and Green Giant vegetables. Since its purchase of Pillsbury, General Mills has also offered Pillsbury refrigerated dough products. The company also distributes a number of other baking products under the Betty Crocker name, as well as Gold Medal flour. General Mills produces a number of snacks, including Nature Valley granola bars, Chex Mix, Fruit Roll-Ups, and Fruit By The Foot. General Mills also sells Yoplait and Colombo yogurt.[5]

International (18.3% of Revenues, 7.7% of Operating Income)[6]

General Mills' international unit generates 17 percent of the company's sales[7]. General Mills makes its products in 17 countries and sells them in more than 130. General Mills sells its cereals in countries outside the United States and Canada primarily through a joint venture with Swiss food giant Nestle. Both companies control 50 percent of Cereal Partners Worldwide, which sells the cereals around the world. General Mills also has a second joint venture with Nestle with regard to the Haagen-Dazs ice cream brand. Under the agreement, General Mills distributes Haagen-Dazs ice cream internationally while Nestle sells Haagen-Dazs products in the United States and Canada[8].

Supported by strong sales of Haagen-Dazs ice cream, popularized by the company's upscale stand-alone scoop shops, and the Wenchai Ferry frozen foods brand, General Mills is looking to rapidly expand its China revenue stream as it increases its geographic distribution throughout the country.[9]

Bakeries and Foodservice (12.0% of Revenues, 8.7% of Net Income)[10]

In its bakeries and foodservice division, General Mills sells mixes, frozen dough products, and flour to restaurants, cafeterias, food service distributors, and bakeries.

Net sales (Billions)
Segment 2005 2006 2007 2008 2009 2010 % sales
U.S. Retail $7.7[11] $8.0[12] $8.5[13] $9.1[14] $10.1[15] $10.3[16] 70%
International $1.7[17] $1.8[18] $2.1[19] $2.56[14] $2.6[20] $2.7[21] 18%[22]
Bakeries and foodservice $1.7[23] $1.7[24] $1.8[25] $2.02[14] $2.05[26] $1.8[27] 12%[28]

Trends & Forces

Rising Food & Energy Costs Pressure Margins

General Mills buys a number of commodities in order to manufacture its products, including cereal grains, sugar, dairy products, and fruit. Changes in the prices of such raw materials could negatively impact total production costs. Because General Mills operates in such a competitive environment, the fear of losing market share limits the company from charging its customers higher prices. To mitigate this ever-present risk, the company purchases commodities in advance using futures contracts and hedges the risks associated with buying commodities.

Supermarket Consolidation Reduces Bargaining Power

A steady trend toward supermarket consolidation is concentrating the buying power of General Mill's largest customers. General Mill's largest customer is Wal-Mart Stores. Although no other company made up more than 10 percent of sales, the company claims that its five largest customers in the U.S. retail division makes up over half of the segment's sales and the five largest customers in bakeries and foodservice made up 45 percent of total sales.[29] Because these large customers are so important to sales, General Mills has less bargaining power when determining wholesale prices.

New Healthy Products Draw New Customers

Increasingly, consumers are buying products that claim to promote better health. Food companies like General Mills have had to adjust their product portfolios in order to adapt to this consumer trend. In the cereal category, General Mills has added whole grains to many of its cereals and has increased the amount of dietary fiber and iron in its reduced sugar cereals. At least three of its brands, Wheaties, Total, and Cascadian Farms, are considered among the leaders in healthy cereals.


In addition, in order to compete with an increasing array of private label brands produced by private label manufacturers and supermarkets, General Mills has had to increase advertising expenditures.

Danone, the maker of Dannon yogurts, is competing with General Mills in its fastest growing business—yogurts. Yoplait controlled 40 percent of the American market for yogurt. Yoplait's sales growth was 14% vs.the overall market which grew 8%. Meanwhile, General Mills is defending its market share from Campbell Soup—which introduced a range of low-sodium soups — by introducing its own line of healthier, low-sodium Progresso soups.[30]

Company Comparison
Company Net Revenue (in millions) International Rev as % of sales Gross Margin %
General Mills $14,797 18% 39.7%
Kellogg $12,575 32.3% 42.9%
Kraft $40,386 41.4% 36.2%
Danone $20,938 N/A 55.0%

Market Share

Although General Mills is the second largest cereal maker in the United States after Kellogg, its products are still highly susceptible to price cuts and promotions by its competitors. Over the last few years, partly due to this competition, the company has lost market share in its cereal business. Kellogg now controls about one-third of the market, followed by General Mills with 31 percent and Quaker (a division of PepsiCo) and Post (a division of Ralcorp Holdings (RAH)) with a combined 30 percent.[31] Kellogg has also launched more cereals than General Mills recently. Kellogg controls 50% of the market for new cereals in the United States. New cereals are particularly important since manufacturers generally charge higher prices for them than for older products.


  1. GIS 2010 10-K, Item 6: Selected Financial Data, p. 17
  2. GIS 2010 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 25
  3. General Mills 2007 10-K Letter to Shareholders
  4. GIS 8-K, 6/29/10
  5. General Mills 2007 10-K Portfolio p. 6-15
  6. GIS 8-K, 6/29/10
  7. General Mills 2007 10-K General Mills at a Glance
  8. General Mills 2007 10-k General Mills at a Glance
  9. General Mills Sees Rapid Growth in China, Food Business News, 2/23/11
  10. GIS 8-K, 6/29/10
  11. General Mills 2005 10-K General Mills at a Glance
  12. General Mills 2006 10-K General Mills at a Glance
  13. General Mills 2007 10-K General Mills at a Glance
  14. 14.0 14.1 14.2 GIS 2008 10-K  
  15. GIS 8-K, 6/29/10
  16. GIS 2010 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 25
  17. General Mills 2005 10-K General Mills at a Glance
  18. General Mills 2006 10-K General Mills at a Glance
  19. General Mills 2007 10-K General Mills at a Glance
  20. GIS 8-K, 6/29/10
  21. GIS 2010 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 25
  22. GIS 2010 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 25
  23. General Mills 2005 10-K General Mills at a Glance
  24. General Mills 2006 10-K General Mills at a Glance
  25. General Mills 2007 10-K General Mills at a Glance
  26. GIS 8-K, 6/29/10
  27. GIS 2010 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 25
  28. GIS 2010 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 25
  29. GIS 2010 10-K, Item 1: Business, p. 6
  30. General Mills 2007 10-K Portfolio p. 10
  31. Kellogg Is The Cereal Leader But For How Much Longer?, Seeking Alpha, 10/27/10
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