Top Bears Reasons To Sell — Vote below!

Add a New Bears Reason

Company: General Mills (GIS)
Current price:
Headline: (100 character max)
9 votes

  Cereal Price Wars and Rising Commodity Costs

Despite the weakened economy, which many expected to be a boon for cereal manufacturers, cereal consumption has decreased 2-3% during the three months prior to August 2010. This coupled with a 32% increase in the price of wheat has many cereal makers, including General Mills, worried. The issue has been brought to a head by a series of price cuts, initiated by Ralcorp in an effort to regain market share for their Post brand of cereals, which the other manufacturers have been forced to match. These three issues have already combined to affect sales for the major cereal companies: Kellogg's cereal sales fell 13% during Q2 2010, and sales for General Mills' US Retail segment (cereal accounts for 23% of segment revenue) decreased 2%. Wheat prices have decreased slightly since spiking in early August, but it is uncertain when the industry's price war will end.

(100 character max) Cancel
16 votes

  Dependent on Wal-Mart

A few large retailers, such as Wal-Mart, control large fractions of the United States supermarket industry. This means that General Mills has less control over the prices it can charge for its products.

(100 character max) Cancel
12 votes

  Competition from generics

The company faces intense price competition from private label brands and other competitors. In order to compete effectively, General Mills has to either cut prices or boost promotions in order to maintain market share. Either choice may significantly affect margins.

(100 character max) Cancel
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki