General Mills will likely scale back its use of contract manufacturing as the pandemic subsides, its CFO says.
Chief Financial Officer Kofi Bruce told the Wall Street Journal that the company added about 50 contract manufacturers to the 200 or so it already used to meet increased demand for its breakfast cereals and other products during the pandemic lockdown.
Contract manufacturing adds up to 15% to product costs, according to experts quoted by the Journal. “If demand starts to taper off, that is the capacity that we will shed first,” Bruce said, adding that General Mills expects the boost from the pandemic to last for some of its products.
In the quarter ending Feb. 28 compared with last year, General Mills reported a gain in net earnings of 31%, to $594 million, on sales of $4.5 billion, up 8%.
