General Mills’ Strong Brands Protect It From Trade-Down to Private Label, but Shares Fairly Valued

We think General Mills’ strong brands (a factor that underpins its narrow moat) are helping to strengthen its elasticities as well as the firm’s minimal exposure to categories with a heavy private-label tilt (less than 30% of sales by our estimate). General Mills reported 10% organic sales growth in its fiscal first quarter (price/mix up 15%, volumes down 5%), topping our 9% forecast. We think the firm is also benefiting from consumers switching to at-home food consumption to help combat inflation, per management commentary and restaurant traffic data, which has softened in recent months.