Dive Brief:
-
Post Holdings reported sales of $1.27 billion for its third quarter of fiscal 2017, a 2% increase from the year-ago period, according to a company release.
-
Operating profit rose 34% to $190.5 million, benefiting from $33.5 million of net foreign currency gains.
-
Post Consumer Brands saw net sales of $427.3 million for the period, falling 1.7% from the prior year, with volumes declining 1%. Net sales were helped by new licensed products Oreo O’s and Honey Maid S’Mores and growth from its Malt-O-Meal products. The segment saw profit of $96.9 million, compared to $75 million for the year-ago period.
Dive Insight:
As the ready-to-eat cereal category continues to struggle, overshadowed by trendy morning foods like protein shakes and Greek yogurt, Post Consumer Brands has taken a hit. In its second fiscal quarter of 2017, Post's RTE cereal business saw a 2% decline as Honey Bunches of Oats, Great Grains and other brands faltered, a decline that's continued into Q3.
By contrast, Post's Active Nutrition segment experienced healthy gains. Net sales for the category rose 20.9% in Q3, boosted by growth in shake products. The gains were partially offset by declines for bar and powder products. Segment profit came in at $28 million for the period.
Still, the company has maintained its confidence in the cereal category, highlighted by its its $1.7 billion acquisition of Weetabix, a U.K.-based CPG company centered on RTE cereal products, earlier this year. It remains to be seen how Weetabix will impact Post's brand portfolio, or if Post will continue to look for M&A opportunities in this space. Weetabix recently rolled out Weetabix On the Go breakfast drinks aimed at consumers looking for convenient morning foods, a product that could potentially capture millennial interest.
Many cereal makers are investing in this kind of convenience-centered innovation, especially as the yogurt industry has invested in grab-and-go morning products. Post has also invested in indulgent cereal products, bringing beloved Oreo O's back to U.S. grocery stores and rolling out a new Honey Maid S'Mores variety. It would be wise for Post to continue a two-pronged approach when it comes to cereal innovation, focusing both on nutrient-rich varieties and more novelty products.