General Mills' Q2 2026: Contradictions Emerge on Volume Growth, Fresh Pet Food Investments, and Pricing Strategy

Business Commentary:

• Sales and Volume Growth:
• General Mills saw improved organic sales in Q2, with particular growth in North America Retail, where volumes increased through the remarkability framework.

• The growth was driven by strategic price adjustments, new product innovation, and improved marketing efforts, including significant improvements in product news and media ROIs.

• North America Retail Performance:

• North America Retail experienced pound share growth in eight out of its top ten categories, with a focus on the remarkability framework and strong new product innovation.

• The improvement in momentum is attributed to successful price adjustments, enhanced innovation, and effective marketing strategies that have helped capture more market share.

• Pet Segment and Love Made Fresh Launch:

• General Mills achieved significant progress in its Pet segment, with the Life Protection Formula returning to share growth and the Cat business growing mid-single digits.

• The successful launch of Love Made Fresh, with a current market share of approximately 5%, has been supported by strong advertising and inventory availability to encourage product trial.

• Cost Management and Holistic Margin Management (HMM):

• General Mills is on track to deliver an additional 5% of HMM savings this year, with a focus on improving margins through transformation initiatives.
• This progress is part of the company's broader strategy to manage costs effectively, offset inflationary pressures, and maintain profitability amidst a challenging economic environment.

Contradiction Point 1

Volume Growth Expectations

It involves differing expectations regarding the sustainability of volume growth, which is crucial for understanding the company's performance trajectory.

Is the positive volume growth in North America Retail sustainable, and how will pricing competition evolve? - Peter Galbo (BofA Securities)

2026Q2: We haven't seen an increase in competitive levels as of now, with discounting levels about the same as a year ago. Our pricing strategy has been executed well across 26 categories. We're under price cliffs and within certain competitive ranges, not at private label levels. Pricing mix is down around 3%. Our remarkability framework is strong, with great product innovation and marketing improvements. The competitive environment remains stable, and we're pleased with the execution of our pricing strategy. - Jeffrey Harmening(CEO)

Is the food industry debate driven by structural issues or pricing-driven consumer pressure? Do recent volume trends align with the company's strategy? - Andrew Lazar (Barclays Bank PLC)

2026Q1: The current environment is mainly influenced by inflation and consumer recovery, not structural issues. Volumes are stable; the biggest gap is on price/mix. Recent initiatives like adjusting Pillsbury and Totino's prices have improved share. Consumers are adapting to new product offerings, such as Cheerios Protein and Progresso Pitmaster. - Jeffrey Harmening(CEO)

Contradiction Point 2

Impact of Price Investments

It highlights differing opinions on the success and necessity of price investments, which directly affects the company's pricing strategy and profitability.

Can volume growth persist post-price cuts and are further base business investments necessary? - Max Andrew Gumport (BNP Paribas)

2026Q2: We're pleased with price investments, with almost 90% performing as expected. No immediate need for further price investments, but we're monitoring. Our remarkability framework is strong. Second half focus remains on remarkability not just pricing. - Dana McNabb(COO)

Are price promotions still needed in fiscal 2026's second half? Are specific categories showing promising results? - David Palmer (Evercore ISI Institutional Equities)

2026Q1: Price adjustments are on track, with base price improvements in Q1 exceeding expectations. New product volumes are up 25%, with successful launches like Cheerios Protein. Plans to further elevate remarkability and innovation. - Dana McNabb(COO)

Contradiction Point 3

Fresh Pet Food Strategic Focus and Investments

It involves the strategic focus and timeline for investments in the Fresh Pet Food segment, which is seen as a key growth area for the company.

What are the margin potential and merchandising strategy for Blue Buffalo's fresh pet food national launch? - Kenneth Goldman(JPMorgan Chase & Co, Research Division)

2026Q2: The national launch will allow for greater marketing to generate trial, knowing that the repeat rates are good. The investment will take a couple of years for trial but is expected to build a profitable and growing business. - Jeffrey Harmening(CEO)

How do you ensure the fiscal '26 reinvestment plan is managed responsibly without affecting margins? - Andrew Lazar(Barclays Bank PLC, Research Division)

2025Q4: The significant investments we're making in our largest priority, support, basically the Fresh Pet Food segment. Against the backdrop of modest category growth, we want to put our investing dollars where we believe we have the greatest opportunity to grow and build our segments. And so the investments, although significant, are expected to be temporary. - Kofi Bruce(CFO)

Contradiction Point 4

Pricing Strategy and Competitive Environment

It pertains to the company's pricing strategy and its reaction to competitive environment, which directly impacts revenue and profitability.

How sustainable is the positive volume growth in North America Retail, and how will the competitive landscape impact pricing strategies? - Peter Galbo(BofA Securities, Research Division)

2026Q2: We haven't seen an increase in competitive levels as of now, with discounting levels about the same as a year ago. Our pricing strategy has been executed well across 26 categories. - Jeffrey Harmening(CEO)

How are you addressing competitive pricing and maintaining margins amid reinvestment? - Christopher Carey(Wells Fargo Securities, LLC, Research Division)

2025Q4: Our pricing actions are targeted and only where necessary to align with marketing effectiveness and to help us win in more categories. From a competitive environment standpoint, we've been able to take price in 25 of our 26 largest categories. - Jeffrey Harmening(CEO)

Contradiction Point 5

Inventory Management and Phasing

It involves the company's approach to inventory management and financial phasing, which can impact cash flow and operational efficiency.

Can volumes sustain positive growth after lapping price cuts, and are additional core business investments necessary? - Max Andrew Gumport(BNP Paribas Exane, Research Division)

2026Q2: Our inventory levels in North America Retail are actually down 2 points. So we're doing a good job on the trade inventory. Our inventories are in good shape across all of our businesses. - Dana McNabb

Can you clarify Pet's inventory situation and the Q4 reversal expectation? - Peter Galbo(BofA Securities, Research Division)

2025Q4: The Pet Food business has higher volatility due to its e-commerce component. The lumpiness is expected to continue, and the Q4 inventory build was 3 points. - Jeffrey Harmening(CEO)