NEW YORk — While upbeat directionally about General Mills, Inc.’s business, the company’s top executive said reaching its long-term sales growth target in the just-started fiscal year may be a stretch.

Jeffrey L. Harmening, chairman and chief executive officer, offered an update on many aspects of the company’s business in a May 29 discussion with Alexia J.B. Howard, senior analyst with Sanford C. Bernstein & Co. The discussion was part of the Sanford C. Bernstein Strategic Decisions Conference.

Declining to offer specific financial guidance for fiscal year 2025, Harmening said it may be tough for General Mills to hit sales growth of 2% to 3%, the company’s long-term target.

“Our goal will be to be competitive within our categories, and I think we can achieve that in this coming year,” he said. “As we have, by the way, the last four years. We’ve grown in 50% of our categories our market shares.”

While unit volume trends remain weak, Harmening said there is good cause for optimism.

He noted that volumes in the company’s categories were down 3% in the first quarter of 2023 and only 1% in 2024. Decreases at General Mills specifically were steeper but have been improving, too.

Key to trends going positive will be consumers adjusting to cost inflation totaling more than 30% over the past three years, Harmening said.

“Consumers are stretched financially right now,” he said.

When they “feel more economically sound” and acclimate to the higher pricing, market conditions in the food and other industries will improve, Harmening said.

“It’s probably a 12- to 18-month process before consumers really land on, okay, what is the true price of this good going to be?” he said. “And I think it’s particularly difficult for consumers.”

Asked how the competitive environment in ready-to-eat cereal has changed with the creation of WK Kellogg Co as a spinoff from Kellogg Co., Harmening responded by noting General Mills has competed successfully in the cereal market in recent years, “gaining quite a bit of share and doing a really nice job with product innovation.”

“I think we can still do even better work on our core in cereal, and so we’ll continue to market that and continue to dial up our marketing on our core cereal business,” he said.

He said competitive behavior from WK Kellogg has been nothing “out of the ordinary” from General Mills’ perspective. Promotional activity has increased but to historical norms.

“They’re back to where they were before,” he said. “I mean they had a lot of supply chain disruptions, which are well documented, and they’ve talked about it. And to the extent that they kind of get back on their game here in the US along with us and with Post, I think it will be beneficial for the entire cereal category.”

Commenting on private label in the cereal market, he noted that store brands account for only 7% of breakfast cereal sales, versus a 20% share for food overall. The percentage has grown over the past year, but only to pre-pandemic levels.

“To say they had their supply chain issues would be an understatement,” he said, of private label.

Even as discussions about health and wellness and concerns about ultra-processed foods may have intensified, the most important driver of consumer demand remains taste, Harmening said.

“It’s not to say that consumers don’t care about nutrition as well, but I don’t want to get lost in the conversation,” he said. “News flash — people like food that tastes really good. One of the things that General Mills does really well is make food that tastes good and is good for you. And to the extent that consumers are looking at ingredients more closely, I think that’s a benefit for us, and I think that’s going to be an opportunity for us.”

Regenerative agriculture is important to General Mills “because the climate is changing,” Harmening said.

“We depend on the climate, and particularly certain crops like wheat, for example, for flour, or oats, which we make Cheerios and Nature Valley,” he said. “And so regenerative agriculture is a really important step for us because it improves soil health, takes carbon out of the atmosphere, sequesters carbon better, keeps nutrients better, just makes the whole cycle more resilient.

“And so we have a goal of getting to 1 million acres of regenerative agriculture by 2030. We’re more than halfway there, and we set this goal only a few years ago. So we’ve made great progress. There’s more progress yet to make.”

For context, Harmening said 1 million acres equates to a fourth of the land mass required for the company’s ingredient needs.

“It’s not an inconsequential level of space,” he said.

Capping off the presentation was a discussion of why investors should find ownership of General Mills’ shares appealing. Harmening said General Mills has distinguished itself by an ability to “pivot faster than many of our peers” during challenging times.

“If you think the environment ahead of us is going to be really stable, maybe that doesn't matter,” he said. “If you think that the environment ahead of us is rocky, either because of climate change or geopolitics or say the consumer is in flux or that inflation we may or may not know what’s coming, if you think that there’s an air of volatility ahead of us, I think you should bet on us.”