General Mills to sell its North American yogurt business for $2.1B

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Dive Brief:

• General Mills is selling its North American yogurt business to French dairy companies Lactalis and Sodiaal in cash transactions valued at an aggregate $2.1 billion. Lactalis will acquire the U.S. operation and Sodiaal the Canadian business.The deals are expected to close in 2025.
• The divestitures include the U.S. and Canada operations of several yogurt brands including Yoplait, Liberté, Go-Gurt and Oui, as well as manufacturing facilities in Tennessee, Michigan and Québec. 
• The sale allows General Mills to focus its portfolio on faster-growing categories, such as snacks and pet food, while exiting a yogurt business facing competition from companies like Chobani and Danone. The North American yogurt business contributed approximately $1.5 billion to General Mills’ fiscal 2024 net sales.

Dive Insight:

When General Mills acquired the controlling stake of Yoplait more than a decade ago, the brand was the world’s second largest in the yogurt category. Since then, several varieties of yogurt have entered the market, diluting Yoplait’s sales and potential. Greek varieties, led by Chobani, muscled their way into the yogurt case while other types, like Icelandic skyr and plant based, have given consumers even more choices.

Meanwhile, U.S. yogurt sales have recorded stagnant growth, hovering at around $7 billion for much of the last decade, according to Statista data. For a company like General Mills looking to grow its operations, it’s not a recipe for success. The company has reportedly been looking to sell its North American yogurt business for some time.

“Today’s announcement represents another significant step forward for General Mills in advancing our Accelerate strategy and our portfolio reshaping ambitions,” Jeff Harmening, General Mills’ CEO, said in a statement.

Harmening noted that General Mills has “turned over” nearly 30% of its net sales base since fiscal 2018. Its biggest move came when it entered the pet food business with the $8 billion purchase of Blue Buffalo that same year. General Mills has since added other pet food offerings and frozen pizza crust maker TNT Crust.

“By efficiently managing our portfolio and sharpening our focus on our global platforms and local gem brands that have stronger growth prospects and more attractive margins, we will be in a better position to drive top-tier shareholder returns over the long term,” he said.

General Mills plans to use proceeds from the transactions for share repurchases.

For Lactalis, the purchase further expands its efforts to build a deeper presence in the U.S. dairy space. Until 2017, Lactalis North America, a division of the 90-year-old French dairy company, had a minimal presence in the states, mainly through its popular shelf-stable milk brand Parmalat and President.

But seven years ago, Lactalis purchased Stonyfield from Danone for $875 million, which gave the company a strong foothold in organic. Lactalis followed that in 2018 with the addition of Siggi’s, the New York-based maker of Icelandic-style yogurts using simple ingredients. The company then doubled down on its U.S. presence after it acquired products, including Breakstone’s and Knudsen, from Kraft Heinz for $3.2 billion a few years later.

The addition of Yoplait gives Lactalis greater scale in dairy, strengthen its negotiating power with retailers and give it a deeper portfolio of products to sell to consumers.

“These iconic brands are a strategic fit for Lactalis that broaden the range of our consumers and allow us to become a key dairy player in the U.S.,” Emmanuel Besnier, Lactalis’ chairman, said in a statement.

By bringing Yoplait under the dairy-only umbrella of Lactalis, the brand is likely to get more attention than it did at General Mills where it competed for resources with everything from Nature Valley bars and Betty Crocker cupcakes to Cherrios and Chex Mix.

Lactalis could choose to take a similar strategy with Yoplait that it did with Kraft Heinz’s natural cheese business. 

After acquiring the unit in 2021, it spent months studying the brands to identify growth opportunities and unique innovations it could bring to the market. The 90-year Lactalis also tapped into the research and development expertise it had amassed in dairy to develop new products.