The growing popularity of Greek yogurt is putting a damper on General Mills' Yoplait brand, pushing the company's third quarter volume sales down in the U.S.
Though General Mills' Peanut Butter Cheerios made a strong debut at the beginning of the year and the "fast-growing" natural and organics foods sector enjoyed a double-digit increase in sales, domestic volume fell in the quarter ended Feb. 26. Yoplait sales slipped 3% as Greek yogurt brands such as Chobani and Fage grow by leaps and bounds.
Kendall J. Powell, the company's chief executive, blamed "a particularly challenging operating environment with commodity inflation the highest we've seen in 20 years." He also pointed to a "slow economic recovery [that] has kept many consumer budgets under pressure."
Dollar sales, however, were up 4% to $2.61 billion in the U.S., due to strength in General Mills' cereals, snacks and baking goods businesses. Executives said they expect commodity prices to stabilize soon, with margins shrinking less than they did in the third quarter.
And internationally, the company saw massive gains in sales, with double-digit growth in Canada, Latin America and the Asia-Pacific.
Across General Mills, income slipped to $391.5 million, or 58 cents a share, from $392.1 million, or 59 cents a share. Net sales grew 13% to $4.1 billion.