Dive Brief:
- Post Holdings Inc.'s recently acquired MOM Brands cereals saw sales increase in the third fiscal quarter, due mainly to larger bags of cereal and new product introductions. However, this successful acquisition was still not enough to balance out the rest of Post's ailing cereal portfolio, which declined overall.
- Post's Michael Foods Group was able to weather the bird flu outbreak and actually reported a slight increase in sales for egg products, though volumes fell.
- Post made up for decreased volumes by raising prices, aggressively cutting costs, and halting production on certain product lines to focus the eggs it had on high-velocity products.
Dive Insight:
Effective June 30, Post now reports in four segments: Post Consumer Brands, which is a consolidation of Post Foods and MOM Brands cereals, Michael Foods Group, Active Nutrition, and Private Brands. The company has acquired a number of companies since 2014, including PowerBar (under Active Nutrition), Michael Foods, and MOM Brands, which was completed during the third quarter.
PowerBar was a recent acquisition that did not perform as well this past quarter as sales declined, but Post sees promise in the brand. After closing a PowerBar facility in June, Post transferred production to co-manufacturers, which Post expects to generate annualized manufacturing cost savings of approximately $4 million. As with other processed foods companies, these cost savings are crucial to balancing out the poor performances of other stale brands in the company's portfolio, in this case, such as Post cereal brands.