General Mills executives don’t expect consumer spending to rebound any time soon, but they are betting investments in product “remarkability,” including functional nutrition, bold flavors and nostalgia, will pay off by driving growth – even in categories that remain soft.
“US consumers are stressed. They were already stressed going into this new fiscal year with just everyday inflation on everyday items, but then you add to that” reduced government assistance to buy groceries and higher gas prices, General Mills Chief Operating Officer Dana McNabb told investors at Deutsche Bank’s dbAccess Global Consumer Conference yesterday.
“It is tough,” she said, noting that the company’s categories slowed by about a percentage point as it exited the fiscal year.
She added: “We are not assuming that is going to improve. We are assuming categories will stay soft.”
CFO Kofi Bruce agreed, noting, “We’re not building our fiscal ’27 plans on any real improvement in the consumer environment. We expect the value-seeking behaviors we’ve seen hang over fiscal ’26 to continue and extend into fiscal ’27.”
And yet, both executives said they see pockets of resilience that give them confidence heading into fiscal 2027.
General Mills’ strategy hinges on a simple premise: Even value-conscious consumers will spend more for products that deliver benefits they deem worthwhile.
“There are benefits out there that the consumer values and is willing to pay for,” including functional nutrition, bold flavors, nostalgia and the right size package at the right price, she said.
Cereal success shows strategy’s benefits
General Mills’ cereal business illustrates this strategy in action.
For example, General Mills is driving gains in cereal – a category that has suffered notable declines with unit sales of boxed options dropping by more than 2% year-over-year in 2025, according to Circana data.
Cereal is a “$10 billion category that eight out of 10 consumers have in their household. It is really important for our retailers, so we are not looking for this category to drive outsized growth for us. We just need to gain a little bit of share and make sure we’re behaving as a leader in improving the trends in the category,” McNabb said.
And, she added, General Mills is doing that.
“As I think about cereal, I’m proud of our performance this year. We’ve gained pound share, [and] we’re back to household penetration for the first time in a really long time,” she said.
She explained the company is driving growth in cereal by focusing on two key areas.
The first is protein, which “consumers are willing to pay for that benefit,” she said.
“People have left cereal because they feel that it doesn’t keep you fuller for longer. There’s no satiety,” she said.
General Mills is flipping the script with its Cheerios Protein launch, which McNabb said “has been highly incremental to the business. It is going to be $100 million.”
In January, the company also launched Ghost Protein Cereal X Cinnamon Toast Crunch, and Ghost Protein Cereal X Lucky Charms.
The second area within cereal where consumers are willing to spend is granola, which McNabb said is growing double digits and worth $1 billion.
“We are gaining share in that segment,” she said.
In January, the company launched Cheerios Granola in Chocolate, Honey Nut and Apple Cinnamon, and Nature Valley Protein Granolas, including Nature Valley Cinnamon Roll Protein Granola.
Packaging and promos remain essential
Innovating and renovating products with added benefits consumers want is only part of the winning equation in a tight economy. The other parts are packaging and promotions – both of which McNabb said General Mills is delivering strategically.
“If you think about price-pack architecture, I think that is critical in today’s environment. You have to have the right sizes at lower price points that consumers can access,” and larger families are looking for more value, she said.
In fiscal 2026, General Mills invested heavily in ensuring the base prices of its products were “coming under key cliffs and closing gaps relative to the competition,” and “it worked,” McNabb said.
“We really did see our base volume improve. So, if you think about fiscal ’25, our base volume was down 10%. We’re closing this fiscal year, it is up 1% on the brands that we invested in,” she explained.
Pillsbury is a shining example for the company. In fiscal ’25, the base volume was down 10%, but this year it is up 3% on base volume, a point on pound share and back to household penetration, she said.
General Mills is also aligning its coupons and incentives to match pay times to help consumers “get through this,” McNabb added.
Outlook
By leveraging these strategies along with ongoing cost management initiatives, General Mills expects to meet consumer needs and still restore its business back to profitable top line sales growth.
McNabb explained: “As we start to lap the price investments, you’ll see a start to improve dollar share, first with Pillsbury, then cereal, then the snacking businesses will come along. That will be the indication that this ‘remarkability’ investment is resonating with consumers.”
