COVID-19-driven at-home dining has given food company sales a big boost in 2020. General Mills Inc. says those robust numbers will continue after the pandemic is over because economic troubles and the work-from-home trend are expected to continue.
“As we take a step back from the day-to-day dynamic, we see consumer behaviors evolving in ways that we think will stick beyond the pandemic,” said Jeff Harmening, General Mills’ GIS, +1.00% chief executive in prepared earnings remarks post Thursday on the company website.
“[T]he current recession will last beyond the pandemic, and what we have learned from past recessions is that the first and most significant way consumers economize in their food budgets is by eating more at home. For example, in the Great Recession of 2008 to 2010, we saw growth for our at-home categories accelerate by about two points,” Harmening said.
Working from home will also persist as part of shoppers’ routines after the pandemic is over, which will drive continued meals at home, Hermening said.
And the company says it’s prepared for the continued increase in food e-commerce, and has been leveraging sites for brands like Pillsbury and Betty Crocker to engage with customers directly.
General Mills reported fiscal second-quarter earnings and sales that beat expectations. The company expects organic sales growth in the third quarter to be much like results in the second quarter.
Pet food was a strong category for the company, with sales up 18% to $460 million. Wet cat food, a $5 billion product segment in the U.S., and pet treats are opportunities for growth, Harmening said.
Pet adoption and spending on things like gifts for pets are on the rise according to experts in the category. For instance, Ordergroove, a commerce software platform, found that pet care subscription programs saw the largest year-over-year growth during the Black Friday and Cyber Monday shopping period, up 776.7%.
And Walmart Inc. WMT, +0.18% recently expanded its pet offerings to include pet sitting and dog walking services through Rover. The retail giant also offers pet insurance and in-store and online pet pharmacy services.
General Mills is launching a new wet cat food product called Tastefuls next month under the Blue brand.
“[T]he premiumization of pet food and the humanization of pet food is a trend we see coming,” Harmening said during a live call to answer analyst questions, according to a FactSet transcript.
“And we know that pet parents of cats, they want to feed their cats something wholesome and natural, but they also need to taste good because, frankly, cats are picky eaters.”
General Mills shares are up 14% over the past year while the S&P 500 index SPX, +0.39% has gained 16.4% for the period.