Is General Mills (NYSE: GIS) the latest to slim down because of Atkins? In addition to low-carb diets, the food giant cited higher costs and the grocery strike in California when it revealed today that its 2004 earnings will come in at the lighter end of its guidance.
Back in December, things were looking pretty upbeat for the company -- with the implication that it might have been slipping by the food police relatively unnoticed. W.D. Crotty reported that despite some trends that might take cereal off the table, other products, like Totino's Pizzas and Hamburger Helper, were still doing robust sales.
At an investor conference, General Mills said 2004 numbers will come in at the low end of its previous guidance for a range of $2.75 to $2.85 per share. The stock slipped only a hair as a result of the news, though it seems a bit of an overreaction to slip at all, given that it will still meet forecasts.
The outlook for General Mills is certainly brighter than Altria Group's (NYSE: MO) Kraft (NYSE: KFT), which recently announced plans to shutter plants and reduce its workforce. In addition to those changes, healthy new products are on the menu.
Over the weekend, Campbell Soup (NYSE: CPB) -- a major rival of General Mills' Progresso Soup line -- announced a major change to its cute little Goldfish crackers line. Namely, it plans to reformulate them so they contain no transfatty acids, the "bad fats" health proponents warn about. Within the year, its Pepperidge Farm breads will follow suit.
Another major rival, Kellogg (NYSE: K), may be known for cereal, but it is also forging ahead with healthy alternatives, such as its Morningstar Farms line and energy bars.
Not to be outdone, General Mills has several products on plan to address the growing market for healthy alternatives, such as Total Protein Cereal (what a change from Wheaties), 8th Continent Light Soymilk, and Progresso Carb Monitor soup.
Today's news headlines lends negativity to General Mills, though the company ensured it will still meet expectations. However, it does imply that the Atkins trend is a force to be reckoned with and to be watched. General Mills' brands that aren't generally considered low-carb fare include Pillsbury, Betty Crocker, Cheerios, Yoplait, and Bisquick.
While the outlook for General Mills may not be so bleak, it should be interesting to watch the changing face of grocers' shelves, and what the costs may be as food companies reformulate major products to keep up with consumer tastes and trends.
Is General Mills in a better competitive position than its rivals? Talk it over with other Fools on the General Mills discussion board.
Alyce Lomax does not own shares of any of the companies mentioned.
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