General Mills Inc – ReportWire

Are Cheerios and Quaker Oats safe to eat? Experts weigh in on new pesticide concerns.

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Should you pass on that morning bowl of cereal or oatmeal?

Thatâs what some people may be asking in light of a study released this week by the Environmental Working Group, a Washington, D.C.-based nonprofit focused on agricultural and chemical-safety laws in the U.S. The study looked at the prevalence of a pesticide called chlormequat in oat-based food products, including cereals like Cheerios and Quaker Oats.Â

The EWG said it found detectable levels of the chemical in 92% of nonorganic oat-based foods purchased in May 2023.

âStudies in laboratory animals show that chlormequat can cause harm to the normal growth and development of the fetus and damage the reproductive system,â Olga Naidenko, vice president at the EWG, told MarketWatch. Those risks, the EWG report noted, can include reduced fertility.Â

It has not been proven that the substance affects humans in the same way the studies cited by the EWG found it does lab animals, and there are other studies that have found chlormequat had no effect on reproduction in pigs or mice, or any impact on fertilization rates in mice.

The EWG is still advocating that concerned consumers buy organic oat products as an alternative, however.Â

âCertified organic oats are, by law, grown without synthetic pesticides,â Naidenko said.Â

Representatives for General Mills
GIS,
+1.28%,
the company that makes Cheerios, and PepsiCo
PEP,
-0.92%,
which owns Quaker Oats, didnât immediately respond to a request for comment.Â

“âAny family raising kids or thinking about starting a family should do whatever they can do to avoid chlormequat. Itâs not a safe product.â”

â Charles Benbrook, a scientific consultant who focuses on pesticides

The EWGâs recommendation to go organic was echoed by experts that MarketWatch contacted.Â

Charles Benbrook, a scientific consultant based in Washington state who focuses on pesticides, said heâs an oatmeal eater who chooses organic oatmeal âwhen I can get it.â

Regarding chlormequat, Benbrook said, âItâs not a safe product.â

âAny family raising kids or thinking about starting a family should do whatever they can do to avoid chlormequat,â he said.

Melissa Furlong, an assistant professor of environmental health sciences at the University of Arizona, said itâs important to note that chlormequat is not the only pesticide that is found in oat-based cereals. Thereâs still much we need to learn about the health effects the substance might have on humans, she added.

âThatâs not to say it isnât the worst [pesticide]. We donât really know,â Furlong said.Â

Chlormequat has not been approved for use on food crops grown in the U.S., according to the EWG, but it can be found in oats and oat products from other countries. Under the Trump administration, the Environmental Protection Agency started allowing imports of such products into the U.S., the EWG noted, which is why chlormequat can be found in some cereals sold in this country.

The EPA is considering approving chlormequat for use on crops grown in the U.S., according to the agencyâs website. In a call forÂ public comment on its proposed decision, the agency said, âBased on EPAâs human health risk assessment, there are no dietary, residential, or aggregate (i.e., combined dietary and residential exposures) risks of concern.â

The EPA didnât respond immediately to a request for comment.

For her part, Furlong said that while she usually buys organic oat products, she isnât rigid about it â and she might still buy the occasional box of Cheerios.

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February 16, 2024

U.S. stocks struggle to resume climb as Dow edges higher after notching 5th straight record close

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U.S. stock indexes were higher on Wednesday as Wall Street tried to build on their year-end rally with a fresh record in sight for the S&P 500 index.

How are stock indexes trading

The S&P 500
SPX
was inching up 3 points, leaving it nearly flat, at 4,771
The Dow Jones Industrial Average
DJIA
was rising 15 points, leaving it nearly flat, at 37,570
The Nasdaq Composite
COMP
was edging up 35 points, or 0.2%, to 15,038

On Tuesday, the Dow booked a fifth straight record close, while the S&P 500 rose and the Nasdaq extended its winning streak to a ninth day.

What’s driving markets

U.S. stocks were edging higher on Wednesday with the S&P 500 less than 1% shy of the all-time closing high of 4796.56 it recorded at the start of January 2022, while the Dow industrials and Nasdaq were struggling to extend their nine consecutive daily gains.

The Wall Street large-cap benchmark S&P 500 has jumped 24.3% this year, partially powered by hopes that the U.S. economy has not been too badly damaged by the Federal Reserve’s ratcheting up of interest rates to cool inflation.

The latest leg of the rally reflects hopes that with inflation back down to 3.1%, the central bank will begin quickly trimming borrowing costs next year. Not even an concerted effort by Fed officials to counter the market’s rate-cut optimism has damped trader’s ardor.

This dismissal of less-dovish Fedspeak has left some observers bemused.

“Investors are dreaming of aggressive rate cuts in an environment of strong economic growth, and that is not the right recipe for easing inflation and keeping it sufficiently low,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The robust economic data and high earnings expectations are not compatible with a dovish Fed,” she said.

See: Why the 60-40 portfolio is poised to make a comeback in 2024

Perhaps the current bullishness is also reflective of seasonal trends, with optimism about a festive bounce underpinning stocks. The “Santa Claus Rally” period stretches from the last five trading days of the year and first two trading days of the new year, according to the Stock Trader’s Almanac.

Since 1950, the S&P 500 has averaged a gain of 1.32% and closed higher 78.1% of the time over that period, according to Dow Jones Market Data.

SOURCE: DOW JONES MARKET DATA

In U.S. economic data, existing-home sales rose 0.8% in November to 3.82 million, the National Association of Realtors said on Wednesday. Sales of previously owned homes unexpectedly inched up last month, snapping a five-month slump as easing mortgage rates encouraged some U.S. homebuyers.

Meanwhile, U.S. consumer confidence index rose to 110 in December, up from a downwardly revised 101 in the previous month, the Conference Board said Wednesday.

“The consumer is feeling pretty well as rates move lower, employers add to their payroll, and income expectations improve,” said Jeffrey J. Roach, chief economist at LPL Financial. “So far, investors have a green light as they merge into the new year.”

That said, investors will continue seeking guidance from more economic data due later this week that may provide more clarity on the Fed’s interest-rate path in 2024. A revision of third-quarter GDP print is expected on Thursday morning, followed by Friday’s personal consumption expenditure (PCE) inflation report — the Fed’s preferred inflation gauge.

Companies in focus

Shares of Alphabet Inc.
GOOGL,
+2.82%
were jumping 3.3% on Wednesday following a report that said its Google unit plans to reorganize a large part of its advertising sales unit.
Shares of FedEx Corp.
FDX,
-10.56%
were slumping 11% after the package-delivery giant trimmed its full-year sales forecast, amid continued concerns about subdued shipping demand through the peak holiday season.
Shares of General Mills Inc.
GIS,
-2.26%
were off 2.8% after the consumer-foods company reported fiscal second-quarter profit that beat expectations, while revenue missed and the full-year outlook as consumers continue “stronger-than-expected value-seeking behaviors.”
Toro Corp.’s stock
TORO,
-2.15%
was down 2.2% despite the lawn mower company’s fourth-quarter profit and revenue beat analyst estimates.

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December 20, 2023

Big Food vs. Big Pharma: Companies bet on snacking just as weight loss drugs boom

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The snack aisle is seen during a tour of a new Amazon Go store in the Capitol Hill neighborhood of Seattle, Washington, U.S., on Monday, Feb. 24, 2020.

Chona Kasinger | Bloomberg | Getty Images

For more than a century, frosted cornflakes have been the backbone of Kellogg’s business. That changes Monday, when the company will spin off its stable cereal business in favor of its faster-growing snack unit and rename itself Kellanova.

The spinoff comes weeks after another wager that consumers will graze between meals, when J.M. Smucker bought Twinkie maker Hostess Brands for $5.6 billion in a bid to expand its snack lineup.

But food companies’ major bets on snacking come as investors fear the looming danger of Big Pharma’s blockbuster obesity and diabetes drugs Wegovy and Ozempic. Many investors have high hopes for the pharmaceuticals’ future, but their success could mean slower sales for the companies that produce Oreos, Doritos and Hershey’s Kisses.

Big Food’s bet on snacking began roughly a decade ago, and it’s only accelerated as the rest of the grocery aisles see sales stagnate, particularly as prices rise. The U.S. market for savory snacks is expected to grow 6% annually from 2022 through 2027, and sweet snacks’ sales are expected to rise 4.6% annually during that time, according to HSBC. Roughly three-quarters of consumers plan to snack every day, according to Accenture data.

Millennials and Generation Z consumers are fueling the trend. Younger generations snack more often than older consumers, said Kelsey Olsen, food and drink analyst for market research firm Mintel. Millennials and Gen-Z consumers tend to eat smaller meals that are closer together, creating more occasions to grab a snack.

At the same time, Novo Nordisk’s Ozempic and Wegovy have taken off, fueled by prescriptions to help patients lose weight. The drugs, known as GLP-1 agonists, suppress appetites by mimicking a gut hormone. Some patients even report developing aversions to foods with higher sugar and fat content — a category that includes many big snack brands.

More than 9 million prescriptions for these kinds of drugs were written in the U.S. in the fourth quarter of 2022, according to a Trilliant Health report.

Morgan Stanley estimates that the number of patients taking GLP-1 drugs could reach 24 million, or nearly 7% of the U.S. population, by 2035.

If so, consumption of baked goods and salty snacks could fall 3% — or even more if the new eating habits of the people using the treatments extend to their broader households and friends, according to Morgan Stanley’s research. That puts companies like Hershey, Mondelez, PepsiCo, General Mills and Kellogg’s successor Kellanova at risk.

But not everyone in the industry agrees with that assessment.

Weight loss drug uptake could be slow

Boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes and made by Novo Nordisk, is seen at a Rock Canyon Pharmacy in Provo, Utah, May 29, 2023.

George Frey | Reuters

After buying Hostess Brands, Smucker CEO Mark Smucker defended the future of Twinkies and Ding Dongs against the threat of GLP-1 drugs.

“There are multiple ways that consumers will continue to snack. … And given that consumers are going to continue to seek all different types of snacks, and sweet snacks are going to continue to be on the radar, we view that our projections here are sound,” he told analysts on a conference call.

For one, GLP-1 drugs like Wegovy and Ozempic are expensive, with a list price of roughly $1,000 a month. That high price has led some insurers to decide not to cover the treatments.

While some of the nation’s largest insurers, like CVS’s Aetna, cover prescriptions of these drugs, the federal Medicare program, many state Medicaid programs and some commercial insurers don’t, leaving patients to pick up the bills themselves.

Another factor could work in the favor of snack sales. Many of the consumers who eat the most junk food likely won’t be able to afford Wegovy or Ozempic.

“Consumption of indulgent salty snacks that would be considered ‘junk food’ generally over-indexes toward lower-income individuals, who are unlikely to be these drugs’ primary users, ” RBC analyst Nik Modi said in a research note Tuesday.

Modi wrote that he doesn’t believe the drugs will ultimately be problematic for the manufacturers of salty snacks.

What’s more, patients have to inject themselves once a week, and if they stop taking the treatments, their effects disappear, usually erasing any weight loss that had occurred over time.

“This sort of drug is super interesting in what it can do, but I think until it comes in a radically different formulation, in a pill or something like that, and something that has enduring impact and obviously the much lower price point, I think it’s going to be tricky,” said Oliver Wright, senior managing director of Accenture’s consumer goods and services unit.

Even if the drugs become more affordable and are more widely adopted, the change won’t happen overnight. Food companies will have time to adjust to shifting consumer behavior.

“We acknowledge that the impact in the near term is likely to be limited given drug adoption will grow gradually over time, but we could see a longer-term impact as drug prevalence increases,” Morgan Stanley’s Paula Kaufman wrote in a note to clients. “Moreover, we expect companies to adapt to changes in consumer behavior through innovation and portfolio reshaping efforts.”

That may mean slower sales growth than expected and moves to divest some brands. But Big Food has been making strides toward healthier options anyway. GLP-1 drugs could just put more pressure on companies to update their portfolios.

PepsiCo and Mondelez are among the companies that have snapped up smaller brands that make healthier snacks. Still, growing them into global powerhouses will take time.

Food companies are also looking internally, investing in their research and development teams to create new formulations that mirror the taste of their full-sugar and salt versions.

“My prediction is, before the end of the decade, we will have a healthy Oreo that can be put on a plate with an old one, and consumers won’t be able to tell them apart — and that will be a good thing,” Accenture’s Wright said.

— Annika Kim Constantino contributed reporting for this story.

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October 1, 2023

‘Greedflation’ is replacing inflation as companies raise prices for bigger profits, report finds

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That’s the practice by many S&P 500 food and consumer companies of raising prices to protect what a new report calls their “cushioned corporate profits,” and it has enabled them to boost margins through the current inflationary period.

Companies including Kimberly-Clark Corp.
KMB,
-0.45%,
PepsiCo Inc.
PEP,
-0.18%,
General Mills Inc.
GIS,
-0.88%
and Tyson Foods Inc.
TSN,
-0.36%
have on recent earnings calls touted their ability to raise prices, earning tidy profits and rewarding their shareholders as they go, according to the report from Accountable.US, a liberal-leaning consumer-advocacy group.

And they have signaled their intention to continue to take “price actions” even as the Federal Reserve has hiked interest rates an unprecedented 10 times in an effort to tame inflation.

“Higher interest rates haven’t stopped S&P companies, especially in the big food industry, from raising consumer prices despite reporting billions in extra net earnings and over a trillion dollars in new giveaways to wealthy investors,” said Liz Zelnick, director of economic security and corporate power at Accountable.US.

“Corporate greed is a stubborn thing and requires serious action from Congress. The Fed has not seen an adequate return on its investment in a policy that has already created fissures in the economy that could lead to recession. It’s just not worth it,” she said.

Now read: Skip, pause or hike? A guide to what is expected from the Fed on Wednesday.

Accountable.US is not alone in calling out price hikes on essentials including food. Walmart Inc.
WMT,
+0.73%
is also unhappy with packaged-food companies that have steadily raised prices in dry grocery and consumable goods, according to a recent report from research company CFRA.

“Given Walmart’s enormous bargaining power over its suppliers, we expect the retail giant to push back on further price increases from its packaged-food suppliers,” he said. That is expected to hurt margins, especially if volume growth does not recover.

For more, see: Inflation in goods from cereal to soup has given a boost to consumer food stocks. Can Walmart help bring prices, both food and stock, down?

May inflation data released Tuesday found that food prices were up 0.2% from April, after remaining flat for the previous two months. Food prices are up 6.7% over the last year. The food-at-home index is up 5.8% over the last year, while the index for cereals and bakery products is up 10.7%.

Food prices started to rise about two years ago, when supply-chain issues and higher fuel and commodity prices led companies to pass some of those costs on to customers.

But companies appear determined to raise prices even more, despite a decline in shipping and gas costs. Gasoline was down 5.6% in May from April and fuel oil fell 7.7%, according to consumer-price-index figures.

Also read: U.S. inflation slows again, CPI shows, and might keep Fed on sidelines

Kimberly-Clark executives told analysts on its recent earnings call that the company is able to “rapidly implement broad pricing actions” and acknowledged that “pricing has continued to be a big driver behind our top-line growth.”

The company’s first-quarter earnings topped expectations and it raised guidance for the full year. That’s after it raised prices by 10% for a second straight quarter, driving margins wider by 340 basis points.

Shareholders were rewarded to the tune of $425 million during the quarter, the Accountable.US report notes.

PepsiCo Chief Executive Ramon Laguarta told analysts on that company’s recent earnings call that most of its price increases are behind it.

However, he said, “obviously, there are some markets, highly inflationary markets around the world, where we might have to take additional pricing. If you think about Argentina, Turkey, Egypt — those kinds of markets where the currencies are suffering. But the majority of our pricing is already done,” he said, according to a FactSet transcript.

PepsiCo’s 2022 earnings rose 16.9% to nearly $9 billion, and it spent more than $7.6 billion on stock buybacks and dividends, with the former up 1,313% from 2021.

General Mills, meanwhile, bragged about “getting smart about how we look at pricing” on its recent call. The parent of brands including Cheerios, Nature Valley, Blue Buffalo pet products and Pillsbury raised its fiscal 2023 guidance in February.

And Tyson executives touted the “significant pricing power of our portfolio with a year-over-year increase of 7.6%.” Tyson’s latest quarter included a surprise loss, as it was hit by weak demand for meat, along with plant closures and job cuts.

For more, see: Tyson Foods stock slides after meat producer swings to surprise loss

But Tyson had net income of over $3.2 billion in 2022, up from $3 billion in 2021, and it rewarded shareholders with $1.35 billion in buybacks and dividends.

For Accountable.US, it’s more compelling evidence that the Fed’s rate-hike strategy “has failed to root out one of the main drivers of inflation and should give the [Federal Open Market Committee] pause before lifting rates again this week to the detriment of jobs and the economy.”

The Consumer Staples Select Sector SPDR exchange-traded fund
XLP,
+0.36%
has fallen 1.6% to date in 2023, while the SPDR S&P Retail ETF
XRT,
+1.89%
has gained 4.6%. The S&P 500
SPX,
+0.62%
has gained 13% in the same period.

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June 13, 2023

Here are Friday’s biggest analyst calls: Amazon, VF Corp, Deere, Netflix, Rivian, Nvidia & more

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April 14, 2023

Elon Musk says Twitter has had ‘massive’ revenue drop as advertisers pause spending

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Twitter has suffered a “massive drop in revenue” because of advertisers pausing spending on the social media platform, Elon Musk, the new owner of the company, said Friday without providing numbers.

In a tweet, the Tesla, Twitter, and SpaceX CEO cast blame on “activist groups pressuring advertisers.” He said Twitter hasn’t changed its content moderation strategy, and added the company has done “everything we could to appease the activists.”

Musk didn’t specify how much revenue the company has lost from the pullback, or how he was able to attribute that loss to pressure from activist groups.

Musk reiterated his views Friday in an interview at the Baron Investment Conference.

“We’ve made no change in our operations at all,” Musk said at the event. “And we’ve done our absolute best to appease them and nothing is working. So this is a major concern. And I think this is frankly an attack on the First Amendment.”

Twitter has fired or laid off approximately 50% of its employees since he took over on Oct. 28.

In recent days, a number of companies said they would temporarily pause their advertising spending on Twitter to see how things would change there under Musk’s ownership. Tesla competitors General Motors and Audi, and food titan General Mills are among the companies that have paused Twitter spending.

United Airlines suspended its advertising on Twitter earlier this week, a spokesperson for the carrier said on Friday. The airline is still posting on the platform. It appeared to be the first U.S. passenger airline to say it suspended advertising on Twitter. Airlines separately provide customer service on Twitter, which United is also not suspending, the spokesperson said, declining to provide further detail on the decision.

Ad giant IPG advised clients to temporarily pause their Twitter media plans, though it’s unclear how many clients are taking IPG agencies’ advice.

Twitter informed employees Thursday evening that it would begin laying off staff members, according to communications obtained by CNBC. Twitter’s content moderation team is expected to be among those job cuts, Reuters reported, citing tweets by employees.

Musk in a tweet Friday, addressed the layoffs, saying: “Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4M/day. Everyone exited was offered 3 months of severance, which is 50% more than legally required.”

CNBC has not confirmed this with former Twitter employees.

CNBC has also learned that deep cuts were made to Twitter’s global marketing team which handles, among other things, reporting and metrics around ad performance, sales performance and spam.

Earlier this week Musk, who now calls himself “Chief Twit,” met with a group of leaders of civil society organizations to address concerns about hate speech and election-related misinformation on the platform.

Since Musk took the helm, online trolls and bigots raided Twitter, and hate speech has surged on the platform. Musk also tweeted out, then deleted, an unfounded and anti-LGBTQ conspiracy theory about a home invasion and assault on Paul Pelosi, husband of Speaker of the House Nancy Pelosi.

Some of the organizations represented in the hourlong Zoom call on Tuesday have now co-signed an open letter to top Twitter advertisers urging them to suspend their ad spending if Musk fails to enforce the company’s safety standards and community guidelines.

Despite Musk’s claims of a recent revenue slump, Twitter’s ad spending had been on the decline before his takeover of the company was complete, and before civil society organizations began pressuring brands, according to ad analytics platform MediaRadar.

Advertisers on Twitter increased between April and May, around the time that Musk’s plan to take Twitter private was announced, before it began to decline, according to data from MediaRadar. But the average number of advertisers on the platform fell from 3,900 in May to 2,300 in August. It had 2,900 advertisers in September.

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November 4, 2022