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General Mills Using More Co-Packers

foodprocessing 2020-07-27
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General Mills is boosting its use of contract manufacturers to meet spikes in demand caused by the pandemic.

CFO Kofi Bruce told the Wall Street Journal that General Mills may find up to 40 new contract manufacturers to supplement the roughly 200 it is already using. The extra capacity is needed to meet the demand for products like Progresso soup and Betty Crocker cake mixes, which soared as homebound consumers stocked up their pantries.

Bruce says his company will have to put up with higher production costs and lower margins on products made by third parties, but that it’s worth it to maintain market share.

“What’s unknowable right now is how long you are going to need the additional capacity, which is the benefit of seeking out an external supply-chain capacity solution,” Bruce told the Journal.

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