General Mills Earnings Top Expectations But CEO Warns Of 'K-Shaped' Bifurcation

General Mills reported better-than-expected quarterly earnings. Organic revenue fell 1% in the fiscal second quarter, much less than the Bloomberg Consensus estimate of -2.53%, while volumes remained flat after an 8% plunge in the first quarter. Still, the packaged food giant, with more than 100 brands worldwide, cautioned that a bifurcated consumer environment persists across North America.

"While we're encouraged by the progress we're making in improving volume, we've seen a change in consumer behavior this year that is driving an increase in the cost of volume across our categories," CEO Jeff Harmening said in prepared remarks.

But Harmening warned about the "K-shaped" economy, also known as the bifurcated consumer environment, where middle-income and upper-income households are doing just fine, while lower-income, working-class households are under pressure from lingering effects of failed Bidenomics, which the Trump administration has been rushing to correct.

"More specifically, with lower- and middle-income consumers continuing to feel significant economic pressure, we've seen them make a greater proportion of their food purchases on promotion rather than at everyday prices," the CEO pointed out.

He added, "And this has not been driven by increased frequency or depth of promotions by General Mills or our competitors – those metrics are essentially unchanged from a year ago. It's simply a reflection of stressed consumers finding ways to stretch their dollars further."

It is important to note that General Mills operates as a defensive consumer staples company, with sales closely tied to household food budgets, promotion sensitivity, and supermarket behavior rather than to discretionary spending.

Some of the major brands under General Mills' umbrella include Cheerios, Lucky Charms, Cinnamon Toast Crunch, Betty Crocker, Pillsbury, Old El Paso, Nature Valley, Fiber One, and many more brands lining supermarket shelves.

Harmening said this consumer environment only means more deals are coming for cash-strapped consumers: "This is a phenomenon we'll watch closely as we move through the rest of this year. And it gives us even more confidence that our focus on delivering more value to consumers, along with amplifying the other elements of our remarkability framework, is the right one in the current environment."

Comments from the CEO on the bifurcated consumer environment are important because they serve as an almost real-time signal of consumer stress, pricing power, and food inflation dynamics. This helps explain why the Democratic Party is pushing an affordability narrative ahead of the midterms. However, Democrats have failed to tell the whole story: much of the inflation shock was self-inflicted, driven by reckless green spending and left-wing, nation-damaging policies.

However, there has been some talk of an improving consumer landscape for working-class households in 2026, from Treasury Secretary Scott Bessent to Goldman, which this week told clients to buy nicotine, energy drink, and candy stocks.