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General Mills has increased grain and yogurt prices. It works



The company, which also owns Wheaties, Lucky Charms and Annie's, said the volume of actual sales of its products had dropped in North America and Europe during the quarter, though it has risen in Asia.

However, with higher prices and the purchase of Blue Buffalo last year, total sales were up 8% over the previous year.

General Mills was to raise its prices to protect its profit margins, which were threatened by rising dairy product inflation, financial director Donal Mulligan told analysts. The company owns Yoplait, the yogurt maker.

It is also useful to have brands for which people are willing to pay more. Although the overall sales volume has decreased in the United States, General Mills still has several well-known and popular brands.

What was wrong with Kraft Heinz

CEO Jeffrey Harmening said during the conference call that there was a strong demand for Pillsbury bakery products, El Paso tacos kits, Annie's fruit snacks and Fiber One bars, for example.

The food industry has been difficult for many businesses. Discount retailers Walmart (WMT) and Target (TGT), with the king of the warehouse Costco (COST), all put pressure on food companies to keep prices low.

Meanwhile, consumers are moving away from processed and packaged foods to more fresh, organic products.

Kraft Heinz (KHC)for example, has dropped more than 25% this year due to falling demand for its cold meats Oscar Mayer, Jell-O and Kraft Macaroni & Cheese. The company was so focused on cost reduction that it did not do as much as its rivals, including General Mills, to continue producing new brands and improved brands.
Grain company shares Kellogg (K) are down about 4% this year, too.

General Mills is not immune from the problems. Shares are down about 5% since spring 2014.

But the company has found a way to position itself better than its competitors. For example, General Mills took steps to take advantage of the trend of organic products, particularly with the acquisition of Annie's in 2014. It also owns Cascadian Farm's organic product brands and Muir Glen and Liberty yogurt.

This growing trend towards organic foods has kept prices stable despite the emergence of Amazon, (AMZN) who now owns Whole Foods and has his own branded grocery service.
Actions of General Mills (GIS) rose 4% Wednesday on solid results. The stock is now up 26% this year.

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