By Annie Gasparro 

General Mills Inc. on Thursday said the initial surge in sales at the start of the pandemic is moderating but expects to benefit from consumers choosing to eat more at home for years as they continue to grapple with financial strain or work remotely.

"What we have learned from past recessions is that one of the first ways consumers look to save money is by eating at home more than at restaurants," Chief Executive Jeff Harmening said in an interview.

Sales at General Mills' North America retail division, which includes U.S. groceries, rose 9% in the latest quarter from a year ago, after jumping 14% in the quarter that ended in August. Campbell Soup Co. last week reported a similar trend, with sales growth receding.

Still, General Mills and Campbell are among the companies continuing to bet on expectations that people will keep eating at home more than they used to long term.

Mr. Harmening said many consumers are enjoying the benefits of working from home and having more time with their families. "I am highly confident people won't be going into the office as much as they used to; they won't be going on as many business trips," Mr. Harmening said. "That means eating more at home."

The coronavirus pandemic has provided big food makers with an opportunity to attract millions of new consumers who filled their pantries and refrigerators in the early months of the pandemic as dining rooms closed and they hunkered down at home. The companies said they want to capitalize on the momentum by investing in marketing and production capacity.

"This is really about ensuring that we have a shot at holding on to some of the gains that we're seeing in this environment," Mr. Harmening said.

In the latest quarter, General Mills' sales rose 7% to $4.72 billion, topping analysts' expectation of $4.65 billion. Its adjusted earnings per share of $1.06 also beat Wall Street's estimate of 97 cents. General Mills shares rose slightly Thursday, in line with the broader stock market.

General Mills, which makes Cheerios, Yoplait yogurt, Progresso soup and more, said many of its brands have gained market share this year.

Mr. Harmening said improvements the company made to its ingredients and recipes before the pandemic have attracted consumers. For instance, General Mills had made changes to reduce sugar in its yogurt and add protein in its cereals.

General Mills said it has largely rebuilt inventories of its food that were depleted in the early months of the pandemic, but it still has significant capacity issues with soup, dessert mixes and Old El Paso taco shells.

Distributions of coronavirus vaccines in the U.S. began this week, injecting optimism that the end of the pandemic is in sight. However, case counts, hospitalizations and deaths from the virus continue to rise -- a reminder of the virus' toll on the U.S.

"We're still very much in the midst of a pandemic," Mr. Harmening said. "The widespread impact of vaccination will likely take time."

Write to Annie Gasparro at annie.gasparro@wsj.com

 

(END) Dow Jones Newswires

December 17, 2020 11:57 ET (16:57 GMT)

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