NEW YORK (AP) -- Yogurts that have more fat and taste better are gaining popularity, a trend that General Mills said Tuesday is hurting its U.S. yogurt sales.
The company said U.S. yogurt sales were down 20 percent for the quarter, with far steeper declines in Yoplait Light and Yoplait Greek 100 than for original Yoplait. Jeff Harmening, the company's president and chief operating officer, noted the performance reflects the broader declines in "light" and "diet" products in recent years as people move away from calorie counting in search of "calories that count."
As a result, he said General Mills is looking to use more whole milk in its yogurts, and pointed to the launch of its Yoplait custard yogurt earlier this year. That product has more calories than even original Yoplait, but tastes "really, really good," he said.
"Consumers are making the trade-off, they want their calories to count — something that keeps them full throughout the day," Harmening said.
Yogurts that are "simple" with an "artisanal" feel and deliver on taste are more popular, General Mills said, and the company plans to launch a yogurt this summer to try to compete better in that premium segment.
General Mills has been trying to do a better job staying on top of trends in the yogurt category, after acknowledging it was slow to act on the surging popularity of Greek yogurt several years ago. The 20 percent drop in domestic yogurt sales for the three months ended Feb. 26 marked the company's third straight quarter of double-digit declines, following a 7 percent drop for the previous fiscal year.
The number of options in the yogurt section has expanded over the last few years, General Mills noted, with supermarkets devoting more shelf space to them. Yoplait had a market share of 19 percent last year, according to market researcher Euromonitor International, down from 25 percent in 2011.
Another challenge in yogurt has been competitors discounting more heavily as a result of declining dairy costs, General Mills said. The company said its higher prices relative to competitors also hurt other categories during the quarter.
Though not as steep as the declines seen in yogurt, General Mills said U.S. sales also fell for cereal, snacks, and meals and baking in the retail segment. That led to a 7 percent sales decline for the flagship North American retail segment, which accounts for 66 percent of the company's sales. General Mills said it plans to narrow the gap on pricing in its fiscal fourth quarter.
The company's total sales, including the convenience store and foodservice and international segment, fell 5 percent to $3.79 billion, less than the $3.82 billion analysts surveyed by Zacks expected.
Profit fell 1 percent to $357.8 million, or 61 cents per share. Adjusted for restructuring costs and non-recurring costs, earnings came to 72 cents per share, a penny more than analysts expected.
Follow Candice Choi at www.twitter.com/candicechoi