News Roundup: Manufacturers Improve Cash Flow As Supply Chains Ease; General Mills Reports Double Digits Sales Growth

Report: Food and Bev Manufacturers Set To See Cash Flow Improvements As Supply Chains Challenges Ease Up

After nearly three years of supply chain challenges that have forced food manufacturers to stockpile raw materials and ingredients, a new report from inventory management software company Unleashed predicts that companies will begin to see cash flow improvement opportunities this year as disruptions ease across the globe.

According to the report, the 4,500 manufacturers using Unleashed’s platform last year purchased double the inventory they had typically stocked pre-pandemic. In the U.S., food and beverage manufacturing firms held approximately $157,000 worth of overstock. This data was calculated using a formula that examines the rate of sale against delivery lead times, the report states.

“If you have a relatively short cash flow cycle – if you turn over goods quickly and buy new stock all the time – then these savings are something you can bank straight away,” said Maria Pearman, principal and beverage practice leader with advisory firm GHJ, in the report. “Simply by adjusting each re-supply order down to where it should be, you immediately have more cash in hand.”

However, this approach won’t work for all businesses, particularly those that have to order inventory in bulk to get lower prices or those still forced to stockpile due to volatile supply chains. Unleashed, which said it has the ability to track fluctuating conditions like lead times and pricing, found that the majority of firms on its platform are able to make some buying reductions in the near term.

“These figures are calculated based on a ‘just in time’ approach – and not everyone can work like that,” Pearman said in the report. “[Some companies] will have longer cash flow cycles, and that means less opportunity to correct course on the purchasing side. For these people, acting on this new data might be more about selling excess stock before it’s obsolete.”

General Mills Reports Double Digits Sales Growth, Raises FY Expectations

Global food company General Mills saw net sales rise 13% to over $5 billion and gross margins expanded 160 points despite higher input costs, specifically for bakery flour, during Q3 2023, according to an earnings report released this week. Following the upward sales momentum, the company raised its full-year fiscal outlook slightly, now expecting 11% organic net sales growth versus the previous 10%.

“We built on our positive momentum and delivered strong results in the third quarter, including broad-based growth across each of our segments,” said General Mills Chairman and CEO Jeff Harmening, in a press release. “Our team continues to manage well through ongoing supply chain disruptions and volatility in the operating environment. Our brands are winning with consumers, and we plan to sustain this momentum by continuing to invest in brand building, innovation, and capabilities that will drive future growth.”

The company’s North American retail, pet and foodservice business continue to drive the majority of its sales growth while its International arm has experienced a sequential decline due to foreign currency exchange rates. Over the past nine months, General Mill’s international net sales were down 21 percent to $2.0 billion, largely due to exchange rates, but partially impacted by divestitures in its yogurt and dough businesses as well as an Häagen-Dazs ice cream recall.

Perfect Day Layoffs Impact About 70 Employees

Precision fermentation food tech operation Perfect Day is the latest company in the space to conduct a round of layoffs. The cut backs affected less than 70 people globally, according to a spokesperson from the company, with posts from former employees on LinkedIn this week about the move indicating they spanned multiple departments

“This is one of a dozen steps we’re taking to lower our operating costs and set our business up for long-term impact,” said a Perfect Day spokesperson, in an email to NOSH. “We remain very confident in the strength of our business, as do our investors, and will continue to thoughtfully invest in our growth and people as we forge ahead in building a more sustainable tomorrow for our business and our planet.

The news comes only weeks after Eat Just, which also makes plant-based egg proteins, laid off 18% of its staff as a cost cutting measure to help drive its JUST Egg product toward profitability. Additionally, late last month General Mills, which previously had partnered with Perfect Day to develop its plant-based dairy portfolio, abruptly announced its recently launched animal-free cream cheese brand Bold Cultr, would be discontinued.

The line was produced with proteins from Remilk; however the first iteration of the brand was produced in partnership with Perfect Day. Despite the shift, Perfect Day has established partnerships with other CPG players, including Bel Brands, which has steadily rolled out plant-based cheese alternatives across its core brands – Babybel, Laughing Cow and Boursin – in the past two years.

WayFare Secures New Allergen Free Label Certification

Plant-based, top 9 allergen-free dairy brand WayFare announced this week it has secured a new certification for its full portfolio of yogurt, butter, cheeses and pudding products, verifying they are free from dairy, wheat/gluten, eggs, tree nuts, peanuts, shellfish, fish, soy and sesame. The certification was granted by Menutrinfo, a food allergen consulting and advisory firm for CPG and foodservice businesses.

“We avoid ingredients associated with allergens that are common in many plant-based products,” said founder Kelly Coffin, in a press release. “My family’s serious health issues were the catalyst for us starting the brand to create foods we could enjoy while significantly improving our health. I grew up on a dairy farm and became convinced cutting back on dairy was essential to overcome my family’s health conditions and food allergies.”