General Mills, Inc. (GIS), ConAgra Foods, Inc. (CAG): Volume Growth Remains a Headwind for These Companies

Page 1 of 2

The processed food industry has been going through tough times lately as volumes are deteriorating. Rising price levels and weak economic conditions are considered to be the primary reasons behind the volume declines. I believe that declining volumes also signal that developed markets have reached their maturity level and there are less growth opportunities offered by these markets.

Among the top 20 food categories, sales volume decreased for 14 categories over the past year. The $70 billion frozen food industry needs to come up with the solution for the problem; otherwise things can turn out really messy for the industry.

The volume pullback

General Mills, Inc. (NYSE:GIS)

General Mills, Inc. (NYSE:GIS) has been losing market share, which has adversely affected the stock price. In the first quarter of 2013, the company lost market share in six of its top 10 categories, with highest share loss of more than 4% in the yogurt category as compared to prior year. In the last month, General Mills, Inc. (NYSE:GIS)’s sales and volumes have dropped by 1.4% and 0.5%, respectively. However, if we look at last 12 weeks’ stats, the company enjoyed sales growth of 0.3% and volume surge of 1.9%, mainly due to 1.5% reduction in prices. Two food categories, snacks and canned soup, have experienced share gains of 9% and 8%, respectively, in the last twelve weeks as the company improved its distribution channels.

Sales volume growth has also been an ongoing concern for ConAgra Foods, Inc. (NYSE:CAG). The company has realized the sales growth problem, and intends to boost its advertisement spending to support and grow its sales volume in the given circumstances. In 3Q 2013, the company registered flat organic sales on a year over year basis, as volumes were down 3%, offset by a price rise of 3%.

However, in the recent twelve weeks, the company suffered sales and volume drop of 1.7% and 0.6%, respectively, despite a 1.1% reduction in prices.

Volume drop persists in the North American grocery business of Kraft Foods Group Inc (NASDAQ:KRFT). In the last one quarter, the company’s volumes have taken a hit, going down approximately 8%, but partially offset by a price increase of 7%. Cheese and Nuts have been the only sources of growth for Kraft Foods Group Inc (NASDAQ:KRFT) lately. Both the categories contribute 26% and 5%, respectively, and total revenue and sales volumes were up 4% and 9%, respectively in the last quarter.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!