General Mills is warning wholesale buyers about an impending price increase that will almost certainly be passed on to shoppers.
That's according to a recent CNN Business report, which saw copies of letters the Minnesota-based company sent to retailers. The letter explained that come mid-January 2022, prices on many of its products would go up by as much as 20%. That includes products across many of its well-known brands, including Betty Crocker, Annie's, Progresso, Pillsbury, Yoplait and more.
(The company owns an astonishing number of well-known brands. In fact, General Mills has been described as one of the 10 companies that "control everything you buy" because of their breadth.)
Kelsey Roemhildt, a General Mills spokesperson, told Bring Me The News in a written statement the "inflationary environment" has led to higher prices for commodities, logistics and other costs in the supply chain. While the company thinks it can save about 4% of the cost of goods with internal productivity changes, "inflation is so high right now that productivity alone won’t solve it."
The statement continued: "Given the level of inflation and other supply chain costs that we forecast for the fiscal year, we will be using all tools in our pricing toolkit, including taking list price increases where needed across our portfolio. This is consistent with what we’re seeing across the food and beverage industry.”
Prices increases would add further strain to families that have already been hit with rising consumer prices, despite increasing wages.
The most recent state data show wages in Minnesota are up 6.3% compared to a year earlier. That's a faster rise than the national average increase of 5.1% in the private sector. But during that same time, the cost of goods went up an average of 6.2% overall, the Bureau of Labor Statistics says.
Drilling down further, the cost of cereals and bakery products have gone up 3.5% in the past 12 months, according to the Bureau of Labor Statistics' consumer price index. That's not as sharp an increase as many meat, fish and egg products, but still significant. Dairy prices are up 1.8% over that 12-month period as well.
How is General Mills doing?
In its 2021 fiscal year (which runs June-May), the company reported net sales of $18.1 billion, a 3% increase from the year prior, as well as an operating profit of $3.1 billion (up 6% from the previous year).
The most recent quarter saw a 4% increase in net sales, but a 1% drop in operating profit, with the company making a net $844 million.
CEO Jeffrey Harmening, meanwhile, had a base salary of $1.25 million, with another $5.25 million in stock awards, with total compensation for the year at $15.57 million. The 2021 compensation for Group President Jonathan Nudi totaled just under $5.65 million, while CFO Kofi Bruce received just under $3.45 million.