General Mills ups prices after profit drop
MINNEAPOLIS General Mills announced this week that is has raised cereal prices and ay raise prices of other products, as well. This announcement comes in response to mounting production costs for the company, namely in commodity items, such as wheat and sugar, and a drop in reported profits.
The breakfast cereal giant reported that its profit has dropped 17 percent, compared to reporting from the same quarter last year. However, profit still met expectations and the company appears to still be on the right track for the full year’s projections.
To fight the mounting financial pressures of rising commodity prices, the company has cut back on operations. Ken Powell, General Mills’ chairman and chief executive officer told the media that his company has also cut transportation costs from warehouse to warehouse by amending delivery routes to go straight to retailers. The company also devised a plan to save $1 million a year by lowering the number of pretzel varieties in Chex Mix to three, down from 14.
For the fiscal quarter ended May 25, the General Mill reported that its net income dropped to $185.2 million, or 53 cents per share, from $224.1 million, or 62 cents, during the same period the previous year. General Mills said that it faced a loss on commodity hedges of $111 million due to the surging costs of commodities—especially wheat.
General Mills said it expects to see its supply chain expenses rise another 9 percent in the fiscal year ending May 2009.
Wrigley releases details of merger with Mars
CHICAGO Wrigley Jr. Co. has revealed some of the details of a possible merger with Mars in preliminary paperwork filed with the Securities and Exchange Commission.
A proxy filed last week said that if Wrigley backs out of the $23 biillion deal, it now would have to pay Mars $690 million. On the other hand, if Mars pulls out it must pay $1 billion to Wrigley.
Mars raised its per share bid after Wrigley said the initial offer of $76 per share was too low. On April 17, Mars raised the bid to $77 per share, but later made a final offer of $80 per share. Wrigley accepted and a merger agreement was announced April 28.
Reports said that a recent meeting between Wrigley chairman, William Wrigley Jr., Mars president, Paul S. Michaels, and Mars chief financial officer, Olivier C. Goudet, went smoothly.
“Michaels and Goudet also said that this was a friendly proposal to be discussed on an exclusive basis and that Mars would withdraw its proposal if the board of directors of the company was not interested in pursuing the combination or if the company wanted to conduct any type of auction process,” the statement said.
Other details of the change include Mars’ plans to transfer Skittles and Starburst brands to Wrigley. The company has said that it believes Skittles and Starburst would benefit from the confectioner’s “sugar” line, rather than staying in Mars’ chocolate-heavy lineup.
FDA adds isomaltulose to list of tooth-safe sweeteners
ROCKVILLE, Md. Isomaltulose, an artificial sweetener, is getting a boost from the Food and Drug Administration after being added to a list of non-cariogenic carbohydrate sweeteners. The ruling is effective immediately and proponents and marketers of the sweetener now may promote its non-association with dental caries.
“FDA is taking this action to complete the rulemaking initiated with the interim final rule,” the FDA said in an article released in the Federal Register May 27.
Manufacturers using isomaltulose in products like gum will now be permitted to make claims like “does not promote tooth decay” and “may reduce the risk of tooth decay.” Items with the sweetener must be completely sugar-free and must not bring the user’s plaque pH to a level lower than below 5.7 for up to 30 minutes after use.
In 2006, Cargill petitioned to have isomaltulose added to the FDA’s list alongside other sweeteners like D-tagatose and sucralose. Isomaltulose is marketed as a sweetener by such companies as Beneo-Palatinat (Palatinose) and Cargill (Xtend).
The FDA approved the entry of isomaltulose to the non-cariogenic list because it proved not to be “fermented by oral bacteria to an extent sufficient to lower dental plaque pH to levels that would contribute to the erosion of dental enamel.”