MINNEAPOLIS — General Mills, Inc. sees cost savings and reinvestment as the path to recharging growth after a weak third quarter triggered a hefty reduction in the company’s fiscal 2025 guidance.

General Mills needs to rework its value proposition for consumers, according to Jeffrey Harmening, chairman and chief executive officer. That will come starting in the fourth quarter through stepped up investment in pricing, brand marketing, media and innovation, to be supported by savings from new cost-efficiency initiatives, he said.

“Coming into this year, we thought the consumer environment would improve as the year got on, and that hasn’t really been the case,” Harmening told analysts in a March 19 conference call on third-quarter results. “Consumers are still seeking value as much or more than they had when our fiscal year began. If you look at the most recent confidence indices, it would indicate that consumer confidence is actually below where it was three months ago and about where it was in 2008. So, the situation we find ourselves in is different than we thought.

“And so, as we look at next year, it’ll be a year of reinvestment for us, and it’ll be a combination of getting our value right.”

General Mills said the new cost-control push will yield $100 million or more in savings on top of $600 million in gross productivity savings from holistic margin management (HMM). The company expects HMM to shave at least 5% from the cost of goods sold in fiscal 2026, compared with an estimated 5% for fiscal 2025 and 6% for fiscal 2024.

“We see the path ahead next year really focused on driving improved growth and competitiveness,” chief financial officer Kofi Bruce said in the call. “The purpose of the $100 million-plus additional cost savings, the net HMM above inflation, is to free up resources to reinvest for growth. So, the efficiency is there to drive growth. We’re not trying to drive specific improvements in margin. To the extent we have additional flexibility above that $100 million, you can expect our dial to be tilted probably towards reinvestment back into the business. We’ll talk more about specifically where and the nature of that investment in a little bit more detail as we go into our Q4 and give guidance for the next year.”

Plans in place

The strategy already has worked for Pillsbury and Totino’s, two brands in which General Mills recently increased investment and saw results. Pound volume was up 10% for refrigerated dough and 3% for hot snacks year over year through February, the company reported.

“The job to do now is expand that to the rest of our portfolio, which we have been working on and will start to manifest itself in Q4,” Harmening said, citing the cereal and soup segments.

Plans to reignite growth in cereal, where third-quarter US retail sales fell by mid-single digits, include Cheerios Protein Cookies & Crème, a third variety for the line rolled out in January; an on-pack promotion with Marvel Studios’ “Fantastic Four” across core cereal brands; and a double-digit increase in media investment – all launching in the fourth quarter.

Pound volume of refrigerated dough was up 10% in the latest quarter after General Mills increased investment in the business.

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Retail pound volume for soup has risen in fiscal 2025, and Harmening said General Mills aims to strengthen that momentum in the fourth quarter. The company has introduced media campaigns promoting Progresso’s protein and fiber benefits to consumers ages 55 and older and to GLP-1 drug users; implemented strong support plans for Progresso Protein and the new Old El Paso soups; and partnered with barbecue brand Pitmaster to launch the Progresso Pitmaster soup line leading into the US summer grilling season.

“I would expect our cereal business to come back in Q4, and I would expect our soup business as well to show improvement in Q4 as we get the marketing in a good place and the value in a good place,” Harmening said.

Marketing and innovation efforts also are under way to improve performance in snack bars, fruit snacks and salty snacks, as General Mills reported a 6% organic net sales decrease for its US snacks business in the third quarter. For example, the company has introduced opening price-point and value-size packs for Nature Valley bars and Chex and Gardetto’s snack mixes; launched new varieties for Mott’s and Annie’s fruit snacks, Nature Valley and Mott’s bars, and Chex snack mix; and partnered with Warner Brothers to launch Harry Potter fruit snacks this summer.

“The fruit snacks category is down and part of that is discretionary, but we haven’t distinguished ourselves in the shelf front either,” Harmening said. “And a couple of big retailers introduced private label (competing products) during that period. So, there’s no question that the job to do on fruit snacks is making sure our value is in the range, but also then getting back to innovation.”

Snacks bars had “a tough quarter” due in part to a competitor that had been “off shelf a year ago,” Harmening said.

“But I feel good about our bars business and some of the innovation we have coming on bars,” he said, citing Cheerios and Nature Valley protein bars. “And so, our bars business I would look to rebound probably more quickly even than fruit snacks.”

Though value is a linchpin for salty snack sales, many consumers want more variety, according to Harmening.

“It’s very clear that consumers are looking for bold flavors. So, our ability to introduce some new products with some bolder flavors is going to be part of our success in salty snacks.”

General Mills’ categories are growing about 1% at the top line, below its long-term algorithm of 2% to 3%, Harmening said, explaining that “the biggest delta really is price/mix.

“As a CPG company, the recipe for success is relatively simple, even if it’s difficult to execute, which is you need really good marketing on your core. You need good new product innovation, and you need the value to be in the zone where your marketing can work.”

Reset coming for other Big Food players?

Investment firm TD Cowen reckoned that, over a two-year period, General Mills could see a 9%-10% pullback in core operating profit and 200 basis points of margin to fund investment in price and marketing to improve its consumer value proposition.

“By our math, they have now introduced everyday low prices in categories that represent 31% of US sales,” TD Cowen analyst Robert Moskow wrote in a March 20 research note.

Innovation in brands like Nature Valley are expected to reenergize General Mills’ bar business.

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Moskow also questioned whether General Mills’ projected HMM productivity and administrative cost savings for fiscal 2026 might indicate “job cuts on the horizon.”

“We take this to mean that the company is preparing for another series of restructuring charges, presumably to address stranded costs from the Yoplait divestiture,” he said.

Calling General Mills a “bellwether” for the packaged food sector, Moskow noted the company’s actions could portend similar moves by its competitors.

“We view General Mills’ investments as acknowledgement that they and other big food companies raised prices too high during the pandemic and need to reset the value equations (and their margins) in a large swath of categories,” he said. “Waiting for consumers to acclimate to cumulative inflation is not likely to work out well at a time when consumer confidence is declining, GLP-1 usage is expanding, and the government is poised for another cut to SNAP benefits. We expect several other big food peers to follow their lead in the coming quarters.”