General Mills lifts annual forecast on upbeat demand for at-home cooking

General Mills Inc (GIS.N) raised its full-year forecast after beating quarterly profit estimates on Wednesday, as higher product prices did not quell demand for the Cheerios maker’s snacks and cereals.

Packaged food makers have been steadily raising prices on everything from cereals to beef jerky as they look to insulate their margins from increased costs tied to labor, ingredients and transportation without drawing consumer ire.

With inflation nearing forty-year highs, the consumer preference for cooking more at home, which developed during the pandemic, has been hard to shake off as shoppers try to stretch their dollars amid soaring energy and food prices.

“Significant inflation and reduced consumer spending power has led to an increase in at-home eating and other value-seeking behaviors,” Chief Executive Officer Jeff Harmening said, attributing the demand for home cooking for the lower-than-expected impact of pricing on sales volume in the quarter.

Third Bridge analyst Shoggi Ezeizat noted General Mills looks resilient against inflation pressures, adding “the group’s wide range of products and spectrum of price points should provide sufficient options for its customers to trade down but not out of the General Mills range.”

The Lucky Charms owner said it expects consumers to become more price sensitive over the next three quarters.

Shares of the Minnesota-based packaged food maker rose 3.7% as the positive results echo sentiments from some of its peers, including Kellogg (K.N), J.M. Smucker (SJM.N) and Kraft Heinz Co (KHC.O), which have also raised annual forecasts in recent months.

The company now expects organic net sales to rise between 6% and 7% in fiscal 2023. It had earlier forecast sales to grow 4% to 5%.

The Betty Crocker cake mix maker also expects fiscal 2023 adjusted profit per share to rise 2% to 5% on constant currency basis, compared with prior forecast range of flat to 3%.