General Mills Lowers Sales Forecast After Price Hikes Fail

General Mills, the multinational manufacturer and marketer of well-known brands like Cheerios and Nature Valley, reduced its yearly sales prediction this Wednesday. This development comes as a consequence of slower-than-expected demand recovery in the wake of consistent price increases across the company’s range of breakfast cereals, snack bars, and pet food products.

The company’s shares manifested the unease, taking a nearly 3% dip in early trading. Adding to the concern, General Mills also brought down the top end of its annual profit growth forecast from 6% to a range of 4%-5%. This change is attributed to the continuing high input costs, predominantly labor-related.

The company had adopted a series of price escalations to counterbalance the rising input costs. This strategy, however, appears to have backfired, nudging consumers toward buying smaller packages of everyday essentials and pet food, or even swaying them toward less-expensive, private-label alternatives.