UPDATE: General Mills Sees Tripling China Sales

General Mills Inc. (GIS) expects to triple its sales from China over the next five years as international sales become a key driver of the company's growth in coming years.

U.S. consumer-product companies have increasingly been looking abroad for growth and General Mills' comments highlight how important developing markets like India, China and Brazil are becoming to the large consumer manufacturers. Still, while these emerging businesses are growing fast, they are a relatively small portion of the overall sales for many companies.

General Mills--which is pushing to sell more products like its Trix Fruit snacks in China--said it expects sales in the country to triple to $900 million by 2015. The company expects overall sales to grow to $18 billion by 2015 and earnings to reach $6.75 a share by 2015. Speaking at a consumer industry conference in Florida, General Mills executives said they expect their international business to be a big driver of that growth.

Like General Mills, other food companies are also looking abroad for growth. ConAgra Foods (CAG) chief executive Gary Rodkin said in an interview that the company will consider expanding internationally, particularly in developing markets, through joint ventures or acquisitions. ConAgra currently gets the bulk of its revenue from North America. Rodkin said, however, that the company isn't looking at large, "transformational" deals at this point implying that any deals would be relatively smaller ones.

To be sure, expanding overseas comes at a price. Margins in many emerging markets tend to be lower than developed ones and many of these companies are still investing in building plants and infrastructure in these markets. Also, these emerging markets can come with risks, like the recent currency devaluation in Venezuela.

"There are local economic risks, there are currency risks," admitted General Mills Chief Executive Ken Powell about developing countries. The company's margins in its international markets are lower than those in North America. Still, the company said it expects its margins in developing markets to improve over time.

-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com

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