General Mills Inc (GIS) September 8, 2026 Conference Transcript

Okay, everybody, if we could just find our seats, we'll kick off our next fireside. Welcome back, everybody. Thanks for joining us, and thank you to General Mills for joining us once again on our conference stage. From the company, we've got Chairman and CEO Jeff Harmoning, along with COO Dana McNabb. Jeff and Dana are going to kick it off just with some opening remarks, and then we'll get right into the Q&A. Thanks again. Jeff, over to you.

Thanks, Andrew. And we'll keep it brief. We just wanted to provide a couple opening points of context, and we'll do the Q&A. But, you know, we thought we'd talk mostly about building on our foundation of fiscal 26 and then, you know, how we're going to continue and improve our organic growth in 27 and then beyond. We did issue a press release this morning reiterating our guidance for the year. You know, what I would say about that is just some additional context. We're really encouraged by the first quarter and the momentum we have in the first quarter of this year, especially on the top line. um it has been pointed out to us that inflation has been increasing you know throughout the first quarter what i would say is that for as a reminder we we guided a four to five percent inflation at the beginning of the fiscal year for us back in in june and uh but we're largely covered and so um even if our inflation at this point we would still see it between four and five percent even if it's tipping to the to the higher end of that range it's still within that range and so we when And we reiterated guidances with that in mind. I'm sure we'll get into the drivers of that probably later on. You know, the other thing is I would say we started the year with three priorities. The first is to strengthen our organic growth. The second is to accelerate our transformation. And the third is to remain disciplined on our capital allocation. And I'm really pleased to say that we're well on track as we end Q1 here on each of those three priorities. Of course, there's always more work to do on all those fronts. But as it stands right now, we felt confident enough in what we've seen so far in Q1 to reiterate our guidance. And I can tell you that we're largely on track. So with that, I'll turn it over to Dana.

Well, thank you, Jess. Good afternoon, everyone. What I thought I would do is just give you some context for what we did to improve the foundation of our business in F26 and then what we're going to do to accelerate growth in F27 and beyond. And I think every person in this room is aware, painfully aware, of the challenges the food industry has faced the last couple of years. If you think about a stressed consumer, changing food values, increases in GLP-1, inflation, geopolitical, you name it, we have faced it. But what we want everyone to understand is that in the face of all these challenges, General Mills is not standing still. We are making significant changes to address the changing food landscape and to make sure that we're serving consumers. And as you think about it, you're all aware of what we did in F26, where we invested in price in order to improve consumer value. We've also accelerated the pace of our innovation and renovation, and we've taken moves to improve our cost structure. And what I will tell you is that it is working. Now, we are not declaring victory. We're still in early innings, but what we believe is the moves that we've taken are the right ones. We're seeing the strategy play out the way that we expected. We're addressing the cost structure in a way that will allow us to meet our financial commitments in face of all this volatility, and that includes our capital allocation priorities and includes the dividend. So we believe that we are on the right track, and we really took some actions to try to get there. So I want to give you some context for why we have confidence. The first is that we took decisive action to fix our base prices and fix, get under key cliffs and fix gaps relative to the competition, and we are seeing improved results from that. We used the Remarkable Experience Framework as our guide. We saw that gaps to the competition and cliffs were our biggest issue. We made the bold decision to invest, and we were the first food manufacturer to do that. And as we exited our fiscal 26, our business is in a better place. We've seen household penetration get back to growth, we've seen stabilized base volume, and we saw that we grew pound share in the majority of our categories, so we're in a better place. The second action we took was really accelerate the pace of innovation and renovation. What we saw when we looked at the Remarkability Experience Framework again is that we simply weren't remarkable. Our products were just not good enough relative to the competition. We had to invest to get back to what the consumer values, give them benefits that they were willing to pay for. And we didn't just sprinkle protein on everything. What we've done is we've said, what does the consumer really value? Where is the growth going? Bold flavors, humanized pet trends, clean label, and yes, some fiber and some protein. And when you look at fiscal 27 with that base price investment behind us, we are now focused on accelerating the innovation and renovation. and over two years, our innovation will be up 50% on big items like Honey Nut Cheerios Protein or renovation on our Haagen-Dazs Belgian chocolate ice cream brand. We're going to bring big renovation on Blue Buffalo, something we haven't done in a long time. And we're even launching emerging brands. So think La Tiara, which is more authentic taco shells and sauces, or bringing Wan Chai Ferry frozen snacks into the United States. So we're making progress on this front. We're not saying it's perfect, but we're making progress. And then we're also improving our operating profit and getting back to sustainable, profitable growth. And that's when we announced $3 billion in transformation, $2 billion of which is our HMM, and $1 billion is significant transformation efforts that are focused on one of the big areas, reimagining our supply chain. And that entire effort is about improving our margins, reducing our leverage, accelerating our cash flow, and really giving us more strategic flexibility. So I took a little more than three minutes, but I just want to be clear that what I hope you hear at the end of this session is that while we are not satisfied with how we performed financially the last two years, we have made significant changes, we are seeing improvement in our results, and I really like the playbook that we're executing against, and I think we will get back to sustainable, profitable growth.

Good. Great. Thank you both for that. Maybe we start the Q&A with a question for you, Jeff. Danny mentioned this a bit, but let's zoom out and consider the significant change we've seen in the food industry over the past 10 years. You know, having seen multiple cycles during your career, which you started at 14. So I'm not being an ageist or an ageist. How do you distinguish between what cyclical pressure that should eventually normalize and what may be more durable change, particularly across consumers and your center store categories, and maybe what gives you the confidence in the long-term trajectory, frankly, of the food industry and General Mills within that?

Yeah, well, thanks for that first question. I mean, yeah, I've seen a lot of trends and cycles over the last, you know, 30 years I've been with General Mills. But look, over the last 10, we've seen plenty. I mean, and that's about how long I've been in this role. I mean, when I first became the CEO of General Mills, we were kind of exiting, you know, the 3G era, if you will, where it was all about cost savings. things. We knew we had to get back to some form of sales growth as well as discipline. And so I call it getting back to the middle of the boat. We did that for a year or two. And then we had this global pandemic hit. And shortly after that, we had supply chain disruptions. And then we had 10 years of inflation in about 18 months. And for the last three years, we've had what I would call the long hangover from that inflation, where we had so much inflationary pressures, but consumer our wages weren't keeping up. And so it created value proposition. And so talking about what's structural and cyclical in such a volatility is kind of an important question. And I'll tell you how I think about it. I think it's important because as human beings, we tend to take what happened in the last year or two and extract it all the way into the future, which I would submit is probably not the best approach. And so what I think about it, I think, you know, what are the things that have stood the test of time. And in the food business, there are four things that we know are true. People care about taste, they care about health, they care about convenience, and they care about value. And I'll touch on those, you know, briefly here in a second. Pet humanization. It's been going on for more than two decades. And can you imagine saying, well, we think people are going to treat their pets less like humans. No. I mean, this is a trend that we know is going to continue, and then there's just the math of demographics. Consumers are aging. Here, all over the world, the population is aging, and in the U.S., it's becoming much more multicultural, and it'll stay that way, and so these are the trends that are the lasting ones, and so as we think about the four that I mentioned at the beginning, look, taste is something that is evergreen. Consumers care about taste in their food. We see a lot more flavor variety now, a lot more significant flavors, especially as a Hispanic population grows in the U.S., and there's an Asian influence on flavors as the world becomes smaller, which, by the way, is great. And so we see that preference changing. Convenience is now about e-commerce and about agentic commerce. That wasn't the case 10 years ago, but it's about convenience. When we think about health, it's all about protein. It's about fiber one, or about fiber, hopefully fiber one. It's about fiber and protein. And so those are the big, and clean labels, those are the big health trends, and then value is something that we see right now, particularly in this environment where inflation is still tracking a little bit ahead of wages. And so I talk about those things, and the great thing is that everything I just talked about, we can address. I mean, General Mills has been around 160 years, not because we failed to address those things, but because we have, because people are still going to eat. We don't know what they're going to do with technology 10 years from now, but we know they're going to eat. And these are the trends that I think are the durable ones. People like to talk about other things, but these are the ones that I think will stand the test of time.

Great. Thank you for that. You know, I know many in the audience are focused on closer-end trends and the current consumer backdrop, and we'll spend some time on that. But, Dana, you've now been in the COO role for a bit. Can you take a minute maybe to help us walk through your initial observations from an operational perspective? What's been working, and where do you have more work to do?

Absolutely. I took on the role, and I was confident that we had really good brands, talented people, and strong operational capabilities. And as I spent the last few months relearning some of the businesses, assessing where we're at with our capabilities, I'm still confident in those areas. We have iconic brands, deeply talented, committed people, and we have an operational powerhouse. I'm feeling very good about those things. If I look at the last 10 years, some of the things I'm really proud of that we've done is, first, we've reshaped our portfolio. We've turned over about a third of the portfolio, reoriented it to more growth. We just closed our Brazil divestiture last week. I'm proud of that. It's all under Jeff's tenure. When I look at what we have done from a digital and technology standpoint, 10 years ago, when we had people come in, they told us we were in the bottom 10% of all CPG from a data and tech standpoint. Jeff declared that we were going to be leaders in it, and now we have a best-in-class capability and this opportunity to really use it to get at more growth and cost savings. And then our supply chain is always fantastic with productivity, quality, service reliability, and that HMM capability that continues to be a strength.

So there is a lot of good.

And having said that, we haven't delivered the way we've needed to for the last couple of years. Part of that is challenges that we've seen in the industry, And part of that is execution on us. And when I think about how my leadership in NAR, one of the things that I underestimated was how stressed the consumer was and that our categories couldn't get back to growth as fast as I thought and probably should have gotten ahead faster on fixing our prices and getting that remarkability. And we also had a couple of areas last year where we did not execute to our standards. That was our Totino's business, where that business alone drove 50% of our pound declines last year. So it's hard to see the growth that we're getting in other areas. And so when you take those challenges and you think about the fact that you have sector rotation out of food, it's been just a difficult time for our shareholders. And believe me, our team is feeling it as well. But the one thing that we know about General Mills and our people is they're resilient. They're unbelievably competitive. They love working together to win, and I'm seeing a real energy behind the fact that they are seeing and believing in this momentum that we're driving, and we're very focused on continuing it and just delivering one day, one week, one month at a time, and as Chief Operating Officer, I am crystal clear, crystal clear that my job is to get the company back to sustainable, profitable growth. I am very disciplined and focused on the way to do that. is from a growth perspective, focus on remarkability, and from a cost perspective, get at HMM and extend that to transformation. And my job is to bring everything together and drive pace, drive accountability, drive focus in order to, again, get back at that, restore sustainable, profitable growth, because that's how we get to shareholder return.

You know, in your opening remarks, you talked a bit about adjusting base prices in fiscal 26. Maybe you can talk about what that actually means why it was so important, how it addressed the value perception for consumers, and I think, frankly, whether it worked in the end.

I am really glad that you asked this question, Andrew, because some of your peers have been writing that...

Some people might say.

Some people might say that the base price investment that we made didn't work and that we're unwinding it, and that is simply not the case. I think it's important to have context that what we were looking at was we talk a lot about base volume, And base volume is what happens when the consumer goes to the shelf and typically buys that product at full price. It is our most profitable volume. It is extremely important to retailers. It is healthy. It's what allows you to get distribution and merchandising wins and have a sustainable business model. And our base volume was declining significantly. Our remarkable experience framework said what we had to do was fix key gaps that we had to competition, get under shelf prices at the shelf. And so what we did was different. We were the first in food to address this challenge. We didn't do it through promotion tactics or through frequency or merchandising the way that some others in the industry did. This was a very targeted program where our sales teams worked with our retail partners, brand by brand, skew by skew. It took us about a quarter to get it done well because, again, we needed to see that everyday shelf price change, and what I will tell you is that we are seeing the results from it. When I finished fiscal 25 and we were looking into fiscal 26, our base pound volume was down 10%. When we finished fiscal 26, it was up 2%. We are entering this year with much stronger, much stronger base foundations, and we still have work to do. And I'm sure the skeptic out there are saying, but Dana, you didn't meet your financial commitments, and how can you say this worked? The base price investment worked. It was that we underestimated how stressed the consumer was, that our categories wouldn't work, and we had these execution issues that I talked about on businesses like Totino's and Wilderness that drove us missing our financial results. But we're very confident that this base price investment worked and has us positioned for further growth.

Right. Maybe building off of that, how should investors think about the shift you're making from your fiscal 26 focus, right, on the price investment to a fiscal 27 plan that emphasizes the other aspects of the broader remarkable experiences framework, namely product packaging, brand communication, on the channel execution. And how is your goal to drive positive price mix in fiscal 27, not a reversal of the work you did last year?

Well, I think, Andrew, you said it very well, probably better than I could. The biggest area we had to fix first last year was making sure that our price value is correct. That is behind us now. We don't think that we need to do more there across the board. But that's only one element of the remarkable experience framework. And so now we're very much focused on how do we improve our innovation and our renovation and our communication. That is where we think a step up will lead to further growth across the year and going forward. And price is about, for us, getting mixed. We'll always continue to evaluate if there's an opportunity to take list pricing, but we believe the fact that we have better innovation that we can price for will allow us to get mixed. We have double the price pack architecture that we have had in previous years. Tons of really good price innovation and that's how we'll make the model work and get back to sustainable growth going forward.

Maybe narrowing in on North America retail, the story you just laid out highlights a lot of moving pieces, of course, across that business. As you sit here today, how would you frame the health of NAR? What are the two or three proof points investors should be watching over maybe the next few quarters to determine whether this business is truly moving from, call it stabilization, to growth?

I would characterize the North America retail business as improving, even though our organic sales haven't got back to growth yet. Again, on this remarkable experience framework that we have, you need to have three out of the five levers better than the competition in order to have sustainable growth. And we're in this place right now where we're still working on the portfolio, getting it from being inferior to parity and then from parity to superior. So we still have work to do. But the work that we have done is driving improvement. If you look at our Q1 retail dollar sales, it has improved by two points versus our Q4. If you look at our top categories, eight of our top 10 categories are improving their dollar share, their dollar sales. And again, on our dollar share perspective, we're not to growth yet, but we are improving and we like the trajectory. And we're increasing our household penetration, and that's through key areas we've been focusing on, like Hispanics and 55+. And this is across big brands, big categories, big businesses. So I look at cereal. Cereal, dollar sales, retail sales have improved by two points in Q1. We have seen really strong success behind our new products, like Cheerios Protein and Granola. That's up double digits. One of the things I'm most proud of is if you look at our taste-forward brands, think Cinnamon Toast Crunch, Lucky Charms, Reese Peanut Butter Puffs, those brands' dollar sales have improved by five points, and every one of those brands has returned to dollar sales growth in Q1. So again, we are seeing improvement. We still have work to do. We are not declaring victory, but what I would say is NAR is improving, and I would focus your attention on continuing to see improvement in dollar sales, in dollar share, and stabilized household penetration.

When we look at the data, you know, it's clear that new sort of emerging brands or disruptor insurgents have been winning in many food categories in the U.S. recently. I mean, the question is, are legacy brands just destined to lose share to insurgents? How do you compete with your big core brands in sort of today's world?

I mean, I just don't believe that big brands are destined to lose share going forward. It's not about whether you're a big brand or you're a small brand or you're an old brand or a new brand. What it's about is do you understand what the consumer values and have you improved your remarkability to beat the competition that's out there. And when you are focused on that, you will see the results. And we have examples here in Q1. I've been talking a lot about new products, but we have since seen some real improvement in what we would call core legacy brands, which many have written about feel like they don't have a right to win. Think about brands like Fruit Roll-Ups or Lucky Charms. Their retail dollars are up 5% in Q1. Betty Crocker Desserts, Reese's Peanut Butter Puffs, those businesses are up 2% in Q1. Again, these are businesses that many have said don't have a right to win, and the way that we have done this is being focused on remarkability and how to be better than the competition. And on these brands in particular, we really got back in our game with marketing. And so things like we have scaled a content studio that uses AI to get better content faster at lower costs, 20% lower, we can reinvest it. Influencers in social media are the way to optimize your reach. And we've had two times the influencers that we had this time last year. That's working. We have brought in new creative agencies that have helped us do much stronger campaigns. And we are using AI to get ahead on e-commerce and on agentic so that we can be easier to find and we can make sure that our product information is more accurate and easier to buy. And so, again, it all comes down to if you focus on what the consumer values and make sure your proposition is better than the competition, you will win, whether big or small.

Maybe switching to pet. You've got a business where the long-term category thesis around humanization remains quite compelling. The near-term performance has been more uneven, particularly with wilderness and some retailer inventory dynamics. I guess, how would you characterize the underlying health of the pet segment today, stripping out shipment timing noise, and what needs to happen for investors to regain confidence that Blue Buffalo can be a consistent share gainer again?

Well, I think that the underlying health of the pet business is actually quite good, despite what you would see in the shipment data. If I think overall, we still really believe in this category. We believe growth will be high single digits, although we get that the picture has been mixed over the last couple of years. When I look at our business, we're really encouraged by our cat feeding business. We are seeing mid-single digit growth, a really strong performance behind Tiki and our core brands. We have seen our treat business inflect back to growth. And it really comes down to the area that we're focusing on, which is dog feeding, where we have done pretty well in life protection formula and have acute challenges in wilderness. So when you look at dog feeding, we all know that we have seen pet adoption slow down. We've seen a shift from big dogs to small dogs. They eat fewer pounds, a migration to fresh. And what we've had to say is we've looked at the remarkability across our proposition. We said we're not good enough in a lot of areas, particularly wilderness. and what you're going to see us come with is some significant new innovation, renovation, and better marketing in order to get at that. So I would say you'll see us accelerate in cat, continue to accelerate in treats. We will continue to have strength and life protection formula and stabilize wilderness, although it will be a bit of time, I'd say 18 months to two years, before we're back to growth with that business.

Cat food relative to dog food, specifically Tiki Cat, has clearly been a bright spot of late. I recently heard you call out that cats are having their moment right now. What's your view on how the pet food segment might evolve moving forward? How are you ensuring the portfolio remains well-positioned, regardless of whether it's cats or dogs that are sort of having their moment?

I mean, you're right. Cats are having a moment. My team always says to me, cat is where it's at. And we have a portfolio that has a right to win. We have great premium brands, really innovative and quality ingredients and taste-forward profiles, which is what cats look for. They're picky. And so, again, we have this gem of a business called Tiki Cat, very premium, growing double digits. We have great plans to expand the distribution on that. I don't want to look over the fact, though, that our core business, Blue Tastefuls, is also growing mid-single digits. So we're really feeling good about our cat business. But like you said, while we're Accelerate Cat, we're not losing focus. We believe this humanization trend is important for the rest of the dry dog segment. I've talked about the fact that we have a plan to improve our propositions there, and the goal is to accelerate growth in every segment that we compete in.

On Love Made Fresh, you've said you remain bullish on the long-term fresh feeding opportunity. I've seen roughly, I think, an 80% retail sales acceleration in recent months, but the launch has also required some adjustments around availability, in-store execution, packaging, and communication. Understanding this was always viewed internally as sort of a multi-year effort, what have been the biggest learnings so far? How should investors think about the right pace of scaling this business versus maybe the need to prove velocity and profitability in the existing footprint?

If I pull up and think about the fresh segment, we still really believe in it, and we think Blue has a right to win. When I look at our launch, what we're hearing from pet parents and consumers is they really like the Blue proposition. They think we have a very high-quality product when you think about the fact that we are natural ingredients, Meat is the first ingredient. We don't have a lot of things they don't value, like corn, et cetera. And so we really think we have the right proposition. What we didn't get right and what we've learned is first the importance of having the stand-up resealable pouch. We did not have that ready to launch. In retrospect, that would be something that we should have had. It would have been better to have all three formats ready to go at the same time. We didn't for supply chain challenges. That pouch is what consumers associate with the category, and it also gives you more blocking power in the cooler, so it's important to have. And we also learned that you need to have your retail reps in the stores more often to make sure the coolers are staying full. And once we addressed those challenges head-on, we immediately saw improvement. In Q4, we saw our sales go up 80%, and then in Q1 of this year, we've seen our sales go up another 30% on top of that. So we are definitely seeing improvement. I like the momentum that we're seeing. We're in about 6,000 coolers right now, and we're very much focused on making sure that we get the trial and repeat that we need in order to have a sustainable business going forward. But overall, I would say we really like where we're at. We have more work to do, and we are committed to this for the long term.

Maybe pivoting quickly to food service, can you talk a bit about how that business is performing and what you expect for this year? We've heard you talk quite a bit about innovation, competitiveness within retail, but I'm curious whether food service can play a larger role in innovation ecosystem as well. To what extent can food service serve as maybe a testing ground for new products, flavors, formats, and how important is that channel to the broader growth agenda over the next several years?

This is me. All right. So North American Food Service is, again, a business that we are feeling really good about. We're continuing to gain market share. We really like the portfolio that we have. We are through some headwinds. We had some headwinds with index pricing as it related to flour and baking last year. We're through that. And we've also done some transformation of our supply chain, which has improved our profitability. So now going forward, we think we're in a good place to have continued momentum. And the two areas that we're focused on are first leading in breakfast. We have a really strong kindergarten to grade 12 business. We're focused on bringing really great tasting items to deliver against new regulatory guidelines. So that would be lower sugar options, lower sodium, certified free colors. We're first to market on that. And so we're really focused on continuing to gain market share there and accelerating. We also are focused on our frozen baked goods business. So if you think about food service, they're always looking for solutions to help their operators. Operators are dealing with complexity and waste and a lack of labor and labor costs. So if we can help provide solutions to those problems, we will grow and have a really strong portfolio that does that. So I like where we're at. We've had good momentum. I think we'll continue to see that going forward.

Maybe on portfolio shaping, you know, you've completed the U.S. yogurt divestiture, announced agreements to exit Brazil, which now has since closed, Haagen-Dazs shops, business in mainland China. How should investors think about the sequencing from here? And does the bar for additional portfolio action skew maybe more towards pruning lower return assets or adding exposure to faster-growing demand spaces where maybe General Mills has a right to win?

Yeah, let me step back and just talk about capital allocation for a second and then talk about portfolio shaping within that. We do have an always-on portfolio shaping capability. As we think about capital allocation, broadly speaking, it hasn't changed over the last decade, which is to say we kind of start with capital spending in our core, which is 3% to 4% of sales. Then our dividend, in this case, keeping the dividend rate the same, M&A and share repurchases. And that's kind of how we've thought about it. And then paying down debt. That's over the longer run. In the short term, I would say those priorities remain the same, accept that instead of prioritizing M&A and share repurchases, we're prioritizing paying down debt. I mean, we've had a dividend for 98 years as a public company, all 98 years, and for 125 years in aggregate, without an eruption and without reducing it. And we have no plans on reducing it or eliminating a dividend. And so then as we think about share repurchase or about portfolio shaping, yes, we'll still consider acquisitions, but there's a very high bar in this environment. And we'll still consider divestitures as well. We've been very active in divestitures. But they have to be divestitures in which we think we can create significant shareholder value. I mean, there's not going to be any fire sale going on when it comes to divestiture at General Mills. We've divested businesses like yogurt, where it had a high capital cost and a relatively low right-to-win, low margins, so we divested it. Brazil would have been the same case. But to the extent that we decide that we want to do additional divestiture, in addition to having to create shareholder value with the proceeds, we would envision paying down debt, as we will with a recently closed Brazil divestiture.

You've outlined a very meaningful increase in productivity and cost savings expectations, now expecting to generate $750 million in cost saves, inclusive of HMM. your Global Transformation Initiative, and other efforts in fiscal 27. What opportunities remain within HMM and the broader productivity agenda? And maybe how sustainable are those savings over the longer term? Because the company's been generating phenomenal productivity for years and years now. And I always get the question, how much can be left? How do they keep delivering for whatever plus percent of cost of goods is productivity every year?

Well, productivity is a competitive advantage for us. HMM is a deep part of our culture. We consider it a strong capability, and now we're taking that capability into this transformation effort. As you rightly said, we've stated that we're going to deliver $750 million of savings this year, inclusive of HMM, and it's a meaningful increase because we have a meaningful need. We have cost inflation. We need to invest back into our businesses, and we want to improve our earnings over time. So we really believe that we have the tools to continue the HMM machine, as you call it. Digital technology has really helped us here. We are using AI to get at demand forecasting. Taking people out of forecasting is really good. AI has helped us get better here. That saves money. We're using that same technology for logistics planning, for manufacturing optimization. So I think we have the right things in place to continue the HMM. And then it's about that next phase, which is transformation. And that's about simplifying how we work, modernizing our ways of working, taking out complexity. And it's also about reimagining our supply chain. Because we have one of the best supply chains in food, but it was also built for a different time. And we really want to focus on right-sizing or looking at that supply chain to help us get at growth. So it's not just about taking out costs. It is also about figuring out a way to increase our flexibility, to be able to do more innovation, to have more channel customization. And so the focus is about cost so that we can, again, improve our margin, decrease our leverage, accelerate our cash flow. But it is also about making us future fit for growth.

Maybe two more. One, while we're on the topic of cost, and you touched on this a little bit at the start, Jeff, can you provide an update on your inflation outlook given some of the recent sort of changes in the market and color we've heard from a bunch of peers?

I've heard some of that recent color and outlook. You know, I guess I would say in June when we announced our guidance for the year, we said inflation would be about 4% or 5%. There were several drivers of that inflation at the time. You know, the first would have been in fuel, and we said we were assuming $100 per barrel, which is kind of where we are now. We talked about inflation in oils and in wheat and in logistics and in packaging. Those were the things we said back in June. Those are the same drivers we're seeing with inflation now. It's also important to note that even though we're seeing inflation increase now, we have probably six to nine months, probably about more like nine months covered on most of our key input variables, especially if it relates to crops like wheat. And so, you know, we're not going to face, at least in this fiscal year, the full brunt of what you might be seeing in the spot market because our hedging strategy is in place and working really well. You know, I will give you another example. We see that the logistics costs are up. They're up about 40% from where they were this time last year. We saw in June that they'd be up about 20%, so they're higher than we thought. But that's the spot rate. And we don't pay the spot rate on all of our freight. We probably pay the spot rate on probably about 7% of our freight. So when you see those costs going up and you see that spot rate going up, You should not assume that General Mills is paying all that increase at this time because, again, we provide frequency with our logistics customers, the same lanes all the time, reliability. And so as we reiterated our guidance at the beginning of this conference, just know that we are not unaware of cost increases. We see them, but also know that we are covered in many cases and that the inflation range we currently see is still within that 4% to 5%, although it may be closer to the 5% than it was to the 4% at the beginning.

All right. Maybe to close it out, and then we can take it to the breakout. Investors have heard over the past couple of years that the volume recovery is coming. The recovery has taken longer and, I think, been more expensive than maybe initially expected. I guess, what do you think investors don't understand about the actions you've taken over the last 12, 18 months to sort of set yourself up for profitable volume growth in fiscal 27?

Yeah, I mean, look, the investors have been paying full attention. And, however, it has taken longer than we thought. We didn't really realize the weakness of the consumer. when we started this base price journey, I would say, 18 months ago. I'm thrilled that we did. Dana talked about that earlier. I think what questions I get from investors, and I understand why, but our base pricing was not where it needed to be following years and years of inflation. And the biggest lever we could pull was on a value equation. Our base prices were down 10. Now they're up 2. I mean, if somebody has an idea that can swing base volumes more than 10%, you let me know because I'd be very willing to do it. But I think that's the piece that investors don't fully understand because, as Dana said, it had been clouded by some other things. The fact that we had to change guidance, the fact that we had a couple brands that needed repairing. Having said that, I think you start to see that in our first quarter our business is up two points better than it was in the first quarter and our categories are better. So I think I would hope that investors would start to see that the fruits of our labor are paying off and, again, more work to do.

It's a great place to cut it here, and please go to the breakout. Jeff, Dana, thank you so much. All right, thank you.