In the RTE cereal post, the emphasis was on “identifying and executing against opportunity.”
Saint Louis — According to Robert V. Vitale, president and CEO of Post Holdings, Inc., competing in the ready-to-eat cereal market is now a “ongoing process of identifying and executing against opportunity.”
During a May 7 conference call to report second-quarter earnings, Mr. Vitale discussed the evolving nature of the RTE cereal market and Post’s strategies for maintaining competitiveness with analysts. Post used to be able to stand apart because of its emphasis on luxurious and affordable bags. Post now needs to reevaluate its positioning as a lot of cereal brands have increased the amount of decadent options they provide.
“If you look back to 2019, we were very early in licensing some more decadent flavors. We started with Oreo and then expanded it into some other brands that are similar, which has caused that segment to become more and more popular, if not saturated,” Mr. Vitale stated. Thus, I believe that when that occurs, it creates opportunities in other markets to try to find them. So, spotting and seizing opportunities is a continuous process.
According to him, this has made the presweetened portion of the market more competitive than it was two or three years ago.According to Mr. Vitale, the RTE cereal category is currently seeing the highest noise level in comparison. In an attempt to forecast future events, he stated that he believes there will be a category that is marginally higher than pre-pandemic levels and stays that way for an extended amount of time when the noise decreases.
“I believe that category, like any large category, needs a continuous process of renovation in order to stay competitive,” the speaker stated. And we’re carrying out our regular business practices—whether it’s providing value, indulgence, protein, or expanding our brands into new markets—because doing so is necessary to keep our competitive edge.
position and, ideally, to strengthen that competitive edge in comparison to the other market participants. We can’t just sit back and claim that the work we performed before the pandemic is a blueprint that will always be effective. We must acknowledge that the category shifts, and that we also must.
Compared to a loss of $191.4 million in the same period last year, Post Holdings’ net income for the second quarter ended March 31 was $109.9 million, or $1.71 per share on the common stock. Losses from the equity method, swap expenses, and loss on debt extinguishment were all included in the loss from the previous year.A slight decrease from $1.49 billion to $1.48 billion was seen in net sales.
With net sales of $479.9 million, a 5.6% reduction from the same period last year, the Post Consumer Brands segment earnings dropped 0.1% to $91.8 million from $92.4 million. Post reported that volumes fell 11.6% (including a 400 basis point boost from Peter Pan). The decline was caused by consumer pantry loading in response to the COVID-19 pandemic, which led to higher purchases in the previous year, as well as declines from the decision to stop selling some low-margin private label products and general softness in value and private label cereal products.
Despite flat net sales of $113.4 million for the quarter, the Weetabix business saw a 7.5% decline in earnings to $25.9 million. Volumes fell 8.5% as a result of consumer pantry loading in response to the COVID-19 pandemic, which led to higher purchases in the previous year. Additionally, sales were pulled forward to the first quarter of 2021 before Brexit was finalized, and bar and drink products continued to decline as a result of lower on-the-go consumption in response to the COVID-19 pandemic.
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Net sales in the Foodservice division, which comprises items made from eggs and potatoes, decreased 2.5% to $369.2 million, but segment profit fell 62% to $8.8 million. Due to a decrease in away-from-home demand in January and February as a result of the COVID-19 pandemic in a variety of channels, including full-service restaurants, quick-service restaurants, education, travel, and lodging, volumes for the second quarter decreased by 11.1% (including a 330-basis-point benefit from Henningsen and Almark), according to Post.While net sales grew to $239.5 million from $237.6 million, the profit for the Refrigerated Retail segment declined 20% to $24.2 million.
BellRing Brands’ segment profit, which covers nutrition bars, protein shakes, and powders, fell 56% to $15.6 million as a result of increased marketing expenditures and increased costs associated with being a public business. Benefiting from RTD shake distribution gains for both new and existing products, planned incremental promotional activity, and a favorable product and customer mix, net sales increased by 9.5% to $282.1 million. However, this increase was partially offset by lapsing an increase in customer trade inventory levels in the previous year period, which was caused by consumer pantry-loading in response to the COVID-19 pandemic.
In contrast to a $92.2 million loss during the same period last year, Post Holdings saw net profits of $191.1 million, or $2.94 per share, for the six-month period. From $2.95 billion to $2.94 billion, net sales declined.