Raising prices can be a tricky gamble, particularly when your consumer products exist within a crowded market. But General Mills, which raised prices in order to offset threats such as dairy industry inflation, said on an earnings call Wednesday that while the volume of its sales are down, its total profits are up 8% since 2018, according to CNN.
Chief executive Jeff Harmening began leading General Mills in 2017, at which point he said his recipe for success would be to focus on a long-range vision to turn the struggling corporation around. “Innovation doesn’t necessarily just mean new products,” he said at the time.
Keeping apace with consumer demand certainly hasn’t hurt. In addition to classic brands such as Betty Crocker and Håagen-Dazs, General Mills owns a number of organic products that help it reach consumers eager for those options, such as Muir Glen and Annie’s Homegrown, which it acquired in 2014 for $820 million in cash.
In fact, consumers tend to be willing to pay more for premium products, such as those that meet organic standards. Paying more for them is a more palatable choice for consumers, and it certainly helps fatten up the corporation.
In addition to the higher prices, General Mills has also enjoyed a boost thanks to its purchase of pet food company Blue Buffalo for $8 billion in 2018.