PORTLAND, Ore. (AP) — General Mills Inc.'s products continue to gain momentum at Wal-Mart Stores Inc., BMO Capital Markets analyst Kenneth Zaslow said in a research note Tuesday.
THE OPINION: General Mills, which makes products such as Cheerios cereal and Yoplait yogurt, generates 23 percent of its sales from Wal-Mart, Zaslow said. The company has gained market share at Wal-Mart, and beat out much of its competition, as its sales at the discount chain increased 14 percent in its 2010 fiscal year.
This is critical as food makers such as General Mills, Kellogg Co. jostle for shelf space at grocers and big box retailers such as Wal-Mart. Food companies are facing stiff competition as they try to get shoppers to spend limited food budgets on their name-brand products and a strong relationship with the retail behemoth is essential to a company's success.
"U.S. packaged food companies will either win with Wal-Mart or lose," Zaslow said. "Wal-Mart represents not only approximately 20 percent of U.S, packaged food sales, but also approximately one-half of the industry's sales growth."
THE STOCK: Zaslow maintained an "Outperform" investment rating and a $43 price target on the company's shares. General Mills shares rose 21 cents to $36.43 in early afternoon trading. The stock has risen about 3 percent in 2010.
