Monday, May 27, 2024

Report: General Mills considering sale of yogurt business

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MINNEAPOLIS — General Mills, Inc. is exploring the sale of its North America yogurt business in a deal that could bring the Minneapolis-based maker of Yoplait yogurt more than $2 billion, according to Reuters.

Citing sources familiar with the situation, Reuters said General Mills has hired New York-based investment firm JPMorgan Chase to help with the sale.

The sources indicated General Mills views its yogurt assets as a non-core part of its current strategy as competition intensifies from market leaders Chobani and Dannon. General Mills’ yogurt brands include Yoplait, Oui, Liberte and Ratio Food.

Yoplait was introduced in 1964 and General Mills has had US marketing rights for the brand since 1977. General Mills acquired a 51% stake in Yoplait from private equity firm PAI Partners and French dairy cooperative Sodiaal in 2011 in a transaction valued at $1.2 billion. Ten years later, in 2021, General Mills sold the European operations of Yoplait to Sodiaal in exchange for full ownership of Yoplait’s Canadian business and a reduced royalty rate for the use of the Yoplait and Liberte brands in the United States and Canada. At that time, General Mills said the US and Canadian yogurt business generated a combined $1.4 billion in net sales in fiscal 2020.

More recently, General Mills said yogurt sales within its North America Retail division totaled $367 million in the third quarter ended Feb. 25, which compared with $378 million in the same period a year ago. For the nine months ended Feb. 25 yogurt sales were $1.1 billion, up from $1.08 billion in the same period a year ago.

General Mills has not commented on the potential sale of the yogurt business, but has mentioned several times over the past year the challenges the category has faced. In a March conference call to discuss third-quarter earnings, Jeffrey L. Harmening, chairman and chief executive officer of General Mills, said yogurt has been “an area where we have struggled as well.” But he said at that time that new Yoplait Protein had gotten off to a nice start.

A year earlier, in February 2023, at the Consumer Analyst Group of New York conference in Boca Raton, Fla., Harmening identified US yogurt as an area where General Mills needed to improve its competitiveness and accelerate growth. He said even though the category experienced 7% retail sales growth for General Mills, it trailed the overall category growth of 13%. He said the company was intent on strengthening its core original-style Go-Gurt and Yoplait lines with flavor news, product improvements and increased brand investment.

“We’re focused on increasing our presence in the low-sugar weight management space, which is leading the growth in the category, by expanding distribution on our highly successful :ratio product line that delivers high protein with lower sugar and lower net carbs,” Harmening said in February 2023. “We’re also significantly stepping up our innovation pressure, including exciting new offerings, launching in early fiscal ‘24. And with yogurt being one of the few categories where on-shelf availability has lagged our competition, we’re working to reduce supply chain disruptions and improve our customer service.”

General Mills is not the only food manufacturer taking a closer look at its yogurt business. The Campbell Soup Co., Camden, NJ, is considering alternatives for the noosa yogurt brand it acquired as part of its $2.7 billion acquisition of Sovos Brands, Inc. earlier this year.

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