General Mills expects to cut 700-800 jobs in North America and 500-600 outside of North America, posts Q4 results ‘slightly ahead of our expectations’

30-Jun-2021 - Last updated on 30-Jun-2021 at 17:40 GMT

New product launches from General Mills include Good Measure bars, Trix cereal bar treats, and :ratio soft bakes. Picture credits: General Mills

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In the near term at least, we can expect to see continued elevated demand for food at home vs pre-pandemic levels as consumers spend more time working from home, cooking and baking, says General Mills, which is currently engaged in a significant round of layoffs as part of an efficiency drive: “As we emerge from the pandemic, it’s clear that consumer behaviors are not returning to what they once were.”

The Minneapolis-based firm, which confirmed to FoodNavigator-USA this morning that “We expect to eliminate 700 to 800 positions across North America and 500 to 600 outside of North America,” said in its 8k filing with the SEC that it expected to incur restructuring charges of approximately $170m-$220m.

The company - which laid off a large tranche of workers about five years ago - said the latest cuts were part of a restructuring exercise under its Accelerate strategy: "These charges are expected to consist primarily of severance and other benefits costs and other charges, including consulting and professional fees, contract termination costs, and fixed asset write-offs.

"We recognized $149 million of severance and other benefits costs and $8 million of other costs in fiscal 2021 related to these actions. We expect these actions to be completed by the end of fiscal 2023."

According to social media posts and anonymous posts on thelayoff.com, in some cases staff will be laid off almost immediately while others have been given an extended period of time to stay before severance goes into effect.

'The highest level of input cost inflation that we’ve seen in 10 years'

CEO Jeff Harmening did not refer to the layoffs in his prepared remarks, but said the company was “making meaningful changes to simplify and streamline parts of our structure to bring our functions and capabilities closer to the business.

“At the same time,” said Harmening, who said fiscal year 2022 was “expected to bring the highest level of input cost inflation that we’ve seen in 10 years,” the company is “establishing a new Strategy & Growth organization focused on advancing our Accelerate strategy, with responsibility for areas including M&A, strategy, consumer insights, brand experience, strategic revenue management and our 301 Inc. minority investment arm.

“This change is not simply a cost-cutting exercise; it’s allowing us to free up resources to continue to invest in growth-facing capabilities. Our priority areas include digital, data and analytics, e-commerce, SRM, strategy, M&A and other capabilities that are critical to our future success.”

E-commerce net sales surged 45% in the full year, and now account for 11% of group sales

General Mills posted a 10% decline in net sales in Q4 (three months to May 30, 2021) reflecting tough comparisons vs the pantry-loading phase of the pandemic in 2020. However, full year net earnings rose 7% to $2.3bn, while net sales rose 3% rise to $18.1bn, said Harmening, who said the Q4 figures were "slightly ahead of our expectations."

E-commerce net sales surged 45% in the full year, and now account for 11% of group sales, he added: “We continue to see our brands holding higher market shares online than in brick-and-mortar outlets.

“The rapid growth in e-commerce, the likelihood that many office workers will have some degree of remote work and the increased appreciation consumers have gained for cooking and baking over the past 18 months will have lasting impacts and will create opportunity.

“Simply put, we are ending one period of significant consumer disruption only to start another.”

'General Mills will exit the pandemic a stronger company than we entered it'

He added: “It is absolutely clear from these results that General Mills will exit the pandemic a stronger company than we entered it.”

Relative to the pre-pandemic period, General Mills has grown household penetration and increased repeat rates across seven of its top 10 US categories, said Harmening, who said roughly 85% of the company’s net sales were derived from at-home food occasions.

“This gives us confidence that as consumers transition to their new normal, they will continue to seek out the General Mills brands they know and trust.”

New products: Good Measure, ‘Little impact on blood sugar’

New products announced this month from General Mills include Trix Cereal Treat Bars, Cocoa Puff Cereal Treat Bars, Pillsbury Mini Sweet Biscuits, :ratio soft bakes, Nature Valley Soft-Baked Blueberry Muffin Bars, limited-edition :ratio crunchy bars, LÄRABAR Fudge Brownie, EPIC BBQ Chicken Bars, and a new brand called Good Measure, launching direct to consumer, on Amazon, and in Hy-Vee stores in Minnesota.

“Aimed at an underserved group of consumers that cares about the nutritional quality of food and how it interacts with their blood sugar, including people with diabetes and prediabetes,” the nut butter bars and crunchy almond crisps contain 2-3g sugar, and are sweetened with allulose, a rare sugar gaining traction with formulators because it has just 0.4 calories per gram, doesn’t raise blood sugar or insulin, and doesn’t count as grams of sugar on the Nutrition Facts panel.

“Nearly one in six adults in the US have already been diagnosed with prediabetes or diabetes. And the U.S. Centers for Disease Control and Prevention estimates one in two adults actually have prediabetes or diabetes but most don’t know it yet,” said Jonathan Scearcy, co-founder of Good Measure in a post on the General Mills blog .

“95% are not happy with current offerings, in particular snacks, so we have the potential to positively impact the lives of millions of people out there who are struggling to find good food options.”