Evaluating General Mills Amid the Economic Downturn
December 3/Minneapolis/Business Monitor International Ltd. (BMI) -- General Mills is the world's sixth largest food firm and owns a number of leading brands in the cereal and convenience categories. The company has posted resilient results during the downturn, and in contrast to many firms in the food industry, it has managed to increase volumes over the last two years. General Mills' portfolio is well suited to the economic climate, with the firm's positioning in the cereal and convenience category allowing it to benefit from the trend toward eating more meals at home. In addition, General Mills' focus on brands that are leaders in their respective categories also seems to have shielded the firm from the trend towards private labels. General Mills' major weakness is its comparative lack of exposure in high-growth emerging markets, and BMI would expect this to be the major focus for in coming years, with increased efforts to take its leading brands to more markets and to buy or develop new products that would have strong emerging market appeal
BMI attributes General Mills' resilience during the downturn to strength of the company's brands. It owns many of the best-known products in the U.S. food sector, including Cheerios and Green Giant. This has meant that the firm has had to engage in less discounting during the downturn, and it has been able to post healthy growth in its margins. In contrast, firms that focus on brands that are not leaders in their respective categories are more vulnerable to consumers trading down to private labels, and to mitigate this risk, they have had to engage in more aggressive price promotions, which take their toll on the bottom line.