Greetings and welcome to the General Mills First Quarter Fiscal 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, September 22, 2021. It is now my pleasure to turn the conference over to Jeff Siemon, Vice President and Investor Relations. Please go ahead, sir.

Thank you, Franz, and good morning, everyone. Appreciate you joining us today for our Q&A session on first quarter results. I hope everyone had time to review the press release, listen to our prepared remarks and view our presentation materials, which were made available this morning on our Investor Relations website. Please note that in our Q&A session, we may make forward-looking statements that are based on our current views and assumptions, including facts and assumptions related to the potential impact of the pandemic on our results in fiscal '22. Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call. And on the call with me this morning are Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; and Jon Nudi, Group President of our North America Retail segment. So let's go ahead and get to the first question. Franz, can you please get us started?

[Operator Instructions] And our first question will be from the line of Andrew Lazar with Barclays.

Jeff, wanted to start off maybe to get a better sense of how you are thinking about guidance for the rest of the year and kind of how you're managing the business in obviously what's still a very volatile environment. I guess, specifically, it sounds like the company has not made meaningful adjustments to its original net sales outlook for the remainder of the year. But it seems like consumption still remains elevated even into your fiscal 2Q. Volume elasticity in response to pricing, while admittedly early, is almost nonexistent so far. And the company obviously has taken additional pricing actions as well. So I guess at a high level, I'm trying to get a sense of how much of guidance sort of builds in a sales deceleration and cost increases that you're already seeing versus just trying to be prudent in what's clearly still a very fluid sort of environment.

Yes. Thanks, Andrew. And let me start by just kind of reiterating what's kind of in our guidance and what's not. And then I'll provide some clarity on kind of what lies ahead. Even in an uncertain market, I find that clarity beats certainty in terms of how we think about these things. And the guidance, important, you kind of hit on it that our updated guidance for the year would reflect the beat we had in sales in the first quarter, which we just announced, but really didn't have any change in our sales performance for the balance of the year. And I mean it probably raises the question then if our [ sales ] remains elevated as it has for the first quarter, would that indicate that there's a possibility that our sales could be higher. And the answer is yes, there is that possibility. The -- and our second quarter has certainly started out well, particularly in North America. As you look at the retail sales and as you look in past or second quarter, we're off to a nice start. But there's certainly -- there is a lot of uncertainty in our -- the revised guidance we have does not contemplate yet revised demand guidance, but I think we'll have a much better view as Q2 unfolds. And as we announce earnings in Q2, we'll have a better view, not only in the quarter, but then how does demand look for the rest of the year. The other piece of it is really on the bottom line. And our guidance not only contemplates what happened in the first quarter, but also the elevated inflation that we're going to see for the balance of the year. We said it was 7% at the beginning year. It's clearly…

Yes. Very helpful. And then just a very quick follow-up. With some of the incremental pricing, retailers obviously always say the same thing, which is they're open to pricing when things are structural as they see structural versus, let's say, purely transitory and things of that nature. So I guess as you've kind of gone back to the well, so to speak, as a lot of others have as well, are those conversations changing at all, broadly speaking, in terms of what is sort of acceptable or thought of as transitory versus structural things that one would need to price for? Just curious, perspective on that.

Let me give you an overview, and then, Jon Nudi, if you have anything to add, I would welcome your commentary as well. I mean, ideally, you'd not like to go to -- back to retailers multiple times or consumers with price increases, but we're clearly not an ideal market. And in a market -- and everyone understands that not only is there inflation, but everyone understands it's also dynamic. And it really is, I'll probably use that word 15 times this morning, but dynamic market. And so people understand the need to revise plans and make sure that we're staying current. And we all -- we're all seeing the same costs. Whether it's transportation costs or labor costs or ingredient costs. I mean we're all seeing the same kind of costs, whether it's CPG companies or retailers. So it's not -- it's never easy, but I think there is understanding that we're in a market that is continuing to change. Jon Nudi, any color you'd like to add to that?

Yes. I think that's exactly right. And obviously, retailers are seeing increased cost and inflation as well. And one of the things we're really proud of is the Strategic Revenue Management capability that we've built over the last 5 years or so. And it's differential in terms of the information we have, the data, the talent and the stories that we can put together. When you come to retailers with a rationale that makes sense, in fact, they tend to listen. And we're really leveraging the entire restaurant tool kit as well. So obviously, we've taken some list price increases, but we continue to look at promotional optimization and mix and PPA and leveraging all of those different tools. So far, so good. We like the way that conversations have gone. We've gotten the majority of our pricing accepted and more importantly, reflected in the market. So that's a trick as well. So we're really working well with retailers, and we'll continue to take the inflation and deal with it as we move throughout the year.

Our next question is from the line of Ken Goldman with JPMorgan.

With the understanding that you don't provide specific quarterly guidance, are there any items, Kofi, that we should be particularly aware of as we model the current quarter, I guess, especially as we think about unusual comparisons with last year or the timing of pricing by segment? I just want to make sure we're sort of minimizing potential surprises there.

Sure, Ken. Thanks for the question. Well, obviously, as you think about the -- in particular, the first half, second half perspective on the year with Q1 coming in stronger than we expect on both the top and the bottom line, we would expect a little bit more balanced year in terms of the flow of margins and that we're seeing more of the cost, obviously, and the cost increase coming in, in the back half, offset by a little bit stronger performance in the first half. And we do still expect our pricing realization to come in sort of full force in Q2 and against the inflation expectations. So just to give you a little bit more color. We don't want to get any deeper on a quarter-by-quarter basis.

I appreciate that. And then as a follow-up, you showed in your chart how -- or sorry, you showed a chart in your slides on how difficult the labor market is. Obviously, your inflation outlook is being raised today largely because of that. We are anecdotally -- and it's very early, but hearing that perhaps the worst is over, though, for the labor situation, given some benefits rolling off, given back-to-school. Obviously, labor is still incredibly difficult to secure. I guess I'm just asking, is it worsening any more? Is -- are you seeing a peak in that -- those challenges? Just curious how to think about that going forward from here.

Yes. I would think the -- no, it's a very fair question, Ken. I guess we foresee labor challenges persisting for quite a while, I mean, especially if you look at logistics. So there's a shortage of truck drivers here in the U.S., and that's not going to abate for a while. There is a shortage in shipping containers as we look at global transportation. You can see them on pictures in the L.A. port. So that's not going to be -- go away for a while. And while we have seen a little bit of loosening in the labor markets once the government spending has kind of decreased, that's not going to solve the whole -- that's not going to help solve the whole dilemma. So I would suggest that the challenges we have with labor and labor inflation are going to persist for quite some time. We have not really seen them abate significantly at this point.

Our next question is from David Palmer with Evercore ISI.

In your transcript, you mentioned that your service levels weren't quite where you wanted them to be. I wonder, what is the average out there in service levels in the industry? And where do you think General Mills is versus normal for today for the industry, but also normal versus itself? And is there any sort of outcome from this? Is it -- are you below where you'd like to be in terms of ship sales? Or are there penalties happening?

Fair question. Jon Nudi, do you want to take that one on?

Yes, absolutely. So David, what I would say is that our service levels are certainly better than they were at the beginning of the pandemic, but still quite a bit off of where we'd like them to be, which is in the high 90s. And really, we're seeing a widespread impact, everything from raw material vendors, challenges there, internal manufacturing, co-packer manufacturing and our distribution network. And it's almost whack-a-mole right now. So we have literally hundreds of disruptions in our supply chains, and it really changes on a daily and weekly basis. So we've gone back to some of the practices that served us well at the beginning of the pandemic. We've stood up the control towers at the working level on a daily basis, on a weekly basis at, I mean, more senior level to really dig in and work with our teams to solve these issues. And we do expect these issues to persist throughout the year. What I like is the way that we're performing, and I think we're outperforming versus many of our competitors in this space. So we are probably somewhere in the 80s in terms of total service levels. And what I would tell you is that it varies widely across categories. And the majority of our categories were actually in the 90s and then performing well. We have a few that -- we have capacity issues. We have a few ingredient issues that are really dragging us down. So we continue to work closely with retailers. In fact, the bulk of our discussions right now with retailers are really around service and making sure that we can ship the product that our consumers are ultimately looking for. So I like the way that we're performing. At the same time, we think it's going to be a challenge as we continue to move throughout the rest of the year.

And then just a follow-up on pet food, maybe a good time to go over where you think the big picture strategy and opportunity is now that you closed on the treats acquisition. Where are your market shares maybe by major pet segment? And where do you see that opportunity? Where do you see that market share going to from your major segments? And I'll pass it on.

Sure. On Blue Buffalo, the first thing I would say is that our organic business on Blue Buffalo performed quite well in the first quarter. I mean we were up 20% and gaining market share really across all the different segments. Having said that, I think it's important also to reflect that for pet, we probably had our easiest comp in the year this past quarter. We're going -- grew about 6% in the first quarter last year and 18% in the second quarter. And so as good as I feel about Blue Buffalo, I feel great about it. I wouldn't model 20% growth for us from here on out because the comparisons get quite a bit steeper as the year goes on. But Blue Buffalo in itself is performing quite well. We really have opportunities across the segment. We over-index in dry dog food, and we basically under-index in every other subsegment of the category. So there is broad opportunity. And I would say with the Tyson acquisition, when we first looked at it several months ago, we liked it. And once we had bought it, we got a closer look. We really liked it. Now that we have it, we like it even more. And what I can tell you is that the growth of 20% is -- kind of exceeded our initial expectations, and it's got a good management team. And they're -- we've not only bought some nice brand, a good portfolio, but a good team. And what that acquisition really helps us to do is cement our leadership in the treats part of the dog category and something we wouldn't have been able to get to by ourselves. And so it's very complementary, both in product form and in customers where Blue Buffalo sits. So the more we've got to see it, the more we feel good after spending that kind of money to make an acquisition. But we feel good both about Blue and about this recent acquisition of the Tyson pet food business.

Our next question is from the line of Michael Lavery with Piper Sandler.

You -- you've got broad pricing across, really, it looks like, every category and segment. Can you touch on just what you're seeing as far as elasticities? And certainly, your sales are holding up, but any surprises? Any variation? It looks like the consumer demand really remains strong, but especially just looking ahead, anything we should maybe watch out for or where there could be some little bit more volume pressure, perhaps?

Michael, what I would say is you made an observation, I think, which is really important, which is that the pricing that we realized in the first quarter is broad. And I think that speaks to what Jon Nudi was talking about earlier in our Strategic Revenue Management capability and the fact that our capability is significantly better across our company than it was 4 years ago. And you see that in the market. We got out to market fast, and we've been out there effectively. As we look at -- as -- you talk about elasticity of demand, it is still early. We don't have a tremendous amount of data points yet. Having said that, it seemed to us as if demand is holding up quite well, it's holding up a little bit better than we had thought. And if I think through the logic of that, particularly here in the U.S., you see that restaurant traffic is still down, the food cost from away-from-home eating are going up at least as fast as they are in at-home eating because of the labor piece of that, and they face the same pressures we do from an ingredient standpoint. So when you see broad-based inflation not only in at-home eating, but also perhaps even more so in away-from-home eating where restaurants, many of them not only do they see inflation, but they're having trouble staffing all of their restaurants. It seems to us that this is an environment where elasticity, at least so far, has seemed to us, are a little bit lower than what we have said. Now the sample size is small, and we'll continue to monitor that. But that's what we see in the world right now and pretty much true across the world, whether it's here, in the U.K. or in China or Brazil.

Okay. That's great. And just a follow-up on your comments about the digital programming and just the unique position you have with all the data you get from the receipts for Box Tops. Can you give a little bit more sense of how you can take advantage of that and really put that data to work?

Well, what we're able to do, whether it's the Buddies by Blue Buffalo, whether it's Box Tops for Education or whether it's what we're doing in China with our Häagen-Dazs omnichannel approach to shops, is that we can better meet consumer demands, and we can give them things that are more specifically interesting to them. And the more specifically -- specific things you can give to consumers, the better off you're going to be in attracting their sales. And not only that, particularly things like Box Tops for Education, we can also partner with our retail customers because a lot of them have first-party data now. And we can combine the data that we have with the data that they have in order to customize offers to consumers that are to the benefit of them, realizing, of course, all the privacy laws and so forth. So I don't want to go in too much more depth than that other than to say that it's the next evolution of marketing. And we talk about connected commerce, and I think for some, it sounds like a buzzword. But we wanted to give you a couple of clear examples that -- at least here at General Mills, it's not a buzzword. It's something we're taking an active approach to.

Our next question is from the line of Chris Growe with Stifel.

I just had a quick question, if I could. In an environment where you're seeing stronger revenue growth, and that's translated into stronger profit growth as we saw in the first quarter. I just want to get a sense around investment. And that can obviously take many forms, marketing or investing back in the business, sort of white space. And you've done a lot of investment back in the business for the last few years. But I want to get a sense of as we think about your opportunities for, say, incremental marketing or something along those lines, would continued stronger revenue growth prompt you to want to reinvest more heavily is the ultimate question.

Chris, thanks for the question. So as we think about structurally, where we are in the year, we're confident that we have strong support behind our priority brands. And we would expect to retain that even as we do see additional cost pressure come in. On the basis of everything we know, we still believe that we have strong ideas, and we're going to continue to support those. I think as we roll forward here, we will also continue to support our capabilities, investments around data and analytics. So at the core of our expectations and our guidance, we've preserved our expectations for the year.

Okay. And just a follow-up question, if I could. In relation to the incremental cost inflation that you expect for the year, you also talked about some more SRM actions and obviously, you still have HMM savings. So does the inflation that's coming through, do you believe you can offset that with your SRM initiatives this year, such that costs are roughly offset by the SRM initiatives and plus HMM?

Yes. So I think I'll start with just the recognition that the environment remains dynamic on the cost side. So we are seeing cost changes moving through the system rapidly. We are -- at this point, our -- we do have a best call on the cost picture for the year, moving up from 7% to 8%. And we've got plans to address what we can see. And the best thing I can tell you is that we are prepared to act should it change further, which is a very distinct possibility in this environment given how much we've seen it move here in the first 3 months of the year.

And then just one follow-on to that, Kofi. The incremental inflation, is that across the remaining 3 quarters? Or is it maybe perhaps more heavily in, say, Q2? Just to understand how that cost -- the incremental costs run for the year.

Yes. So I'll give you the perspective that it is going to impact the second half of the year a little bit more heavily than the first half as you can expect, given the combination of our hedge positions and where we would expect to see this exposure more heavily hit us. So that is part of why we would give you the perspective that we see a little bit more balance in the profit picture between the first half and the second half.

Our next question is from the line of Alexia Howard with Bernstein.

Can you hear me okay?

Yes.

Yes.

Perfect. All right. So the first question I had was really around the categories or the businesses that are holding or gaining share. I think you said that of your priority businesses, you are holding or gaining share in over 2/3 of those. I'm just wondering, which businesses are not priority? And is there an overall number for the company overall? And then I have a quick follow-up.

Yes. I'm not going to give it down to the decimal point, Alexia, on what's priority and not. But I would say that our priority businesses are the overwhelming majority of our businesses. So they are the most significant part. They represent the top 10 categories for us in the U.S. and our categories in Europe and Asia and Brazil. And they include all the global categories as well as the local gems that we talk about. So it's the vast majority of our categories. And so when we say we're gaining share, roughly 65% or so of our categories, you can be confident that is most of our categories throughout the world. And we say prioritize, though, because it doesn't include some, but it includes all of the biggest, most important categories for us.

Okay. And then I think you said earlier that, in answer to the question about service levels, that there are certain categories where you've got capacity constraints and/or ingredient issues. Are you able to just give us a little bit more color on where those ingredient issues are happening? Is it bringing things in from emerging markets? And then domestically, is it capacity issues mainly because of labor? Or is it getting parts into the machines? I'm just trying to figure out where the pain points are from a supply chain perspective. And I'll pass it on.

Yes. I would say, Alexia, that there are a couple of categories where we have supply constraints, only because demand has been high for such a long time. And I'll give you fruit snacks as an example of that here in the U.S., where we grew share, massive amounts of share 2 years in a row. Demand was high before the pandemic, has been high during the pandemic. It's certainly higher right now. And so we've had to go out and add more capacity, which we're going to do -- which we signed off on a year ago and which we come to market a year, but that takes a long time to get to. So fruit snacks would be a great example of one of those places. And desserts right now would be another example where the desserts category has been really strong for us. And so we have capacity constraints. When it comes to ingredients, it's a little bit here and a little bit there. It's not one particular ingredient all around the world. It's really a combination of small things, as I think Jon Nudi aptly described it as whack-a-mole. I mean there's a little -- there's ingredient shortage here and a little bit there. There's labor shortage here, and a truck that's not out there. And so it is not a geography or a category where we see it. It's a little bit of everything. And from what we understand, I think probably most of our competitors and most of our retail customers are experiencing something very similar.

Our next question is from the line of Steve Powers with Deutsche Bank.

Kofi, not to belabor it, but just to round out the comments you've made thus far on cost and cadence. Can you just talk about where cost inflation ran in the first quarter relative to your call for 7%, 8% in the year? And then if possible, the same thing on HMM savings relative to the 4% full year impact expectation? And then I've got a follow-up on pet likely for Jeff.

Okay. Sure. So our HMM ran roughly in line with our sort of full year forecast. And then I think as you look at cost inflation, it was a touch lower, still elevated. So not -- I don't want to get too precise. But I think it's a touch lower than we expected it to be for the remaining 3 quarters [ than it was. ] And the original inflation call is relatively balanced.

Okay. Okay. That helps. And then, Jeff, going back to pet treats and the Tyson brands, as you said, off to a very solid, strong start. Can you expand just on your expectations there as you -- mainly as you plug those businesses into the Blue Buffalo go-to-market model? And just any context on timing as to how you see that process unfolding?

Yes. I was -- first of all, I would say it's off to a strong start. I mean -- and the -- what I'm really pleased with is the way that the Tyson team we inherited and the Blue Buffalo team are really working together already, even if we haven't plugged it into our system. And as I indicated earlier, there is certainly a talented team that we brought over from Tyson, we feel good about them. But we haven't plugged them into our whole system yet or either our distribution system or how that -- or our omnichannel system. And so that's going to take a little bit of time. I mean I don't have an exact date for that. The key for us is that we maintain our execution of that business because it's executing quite well on its own while we bring it in piece by piece to some of the Blue Buffalo businesses, and some things we'll integrate, and some things we won't. And -- but what I can tell you right now is that the teams are working very well together, and it's -- we're only a couple of months in, but we like the start we're off to. And I think once we are able to plug in some of our capabilities to this Tyson business, whether it's Strategic Revenue Management, which we really haven't quite done yet, or Holistic Margin Management, which we haven't done yet, or plug it into the sales team and add to their capabilities, we think that there's quite a bit of room for growth.

Our next question is from the line of Nik Modi with RBC Capital Markets.

Jeff, I wanted to ask a question about -- you've been talking a lot about whack-a-mole, which I think is pretty clear given the environment. But the whack-a-mole seems like it's becoming more normal when you think about just disruptions, weather events and labor shortage, labor issues are probably going to persist longer, issues with other countries in the U.S. and trade wars and impact on ingredient costs. So I'm just curious, like do you think the industry, in general, needs to go through a mini CapEx surge to really appropriate the supply chains and the capabilities to make sure that they can deliver consistent results through this, what I would characterize is going to be probably a volatile environment for many years to come?

Yes. The -- Nik, your observation that it's a volatile environment across all the things you indicated, I think that's exactly right. What I would say is that I think in environments that are difficult, General Mills has tended to perform it's best, and you saw that during the beginning of the pandemic. I think you see it with our first quarter release, and I'm certainly hopeful that you'll see it in the subsequent quarters. And people talk about strategy all the time, but execution is pretty important. And we're executing really, really well. And it's because we're addressing all the things that you just talked about. Now the question is how to address it. Capital may be one area. In some places, automation be -- maybe an area in some cases. But I would also tell you that the coordination amongst your supply chain and your marketing functions and your sales functions, that's as important as adding capital expenditures or automation or things like that. And so I do believe that the challenges that we see right now are -- I think they are the new normal for the foreseeable future. And with the supply chain we have and with the restructuring that we just did, which kind of addresses the holistic business here in North America, I think our chances of executing well will remain high.

Our next question is from the line of Robert Moskow with Credit Suisse.

Congrats on the results, certainly much better than I expected. I wanted to know about the hedges, Kofi. I think you said that you're about 50% hedged for the year. In the back half of the year, can I assume that, that means that you're generally like 0% hedged in the back half? And then what kind of things do you hedge? And what do you not hedge? Maybe you could remind us. Because like trucking, logistics costs, are those part of the hedges? Or is it really like just ingredients that you hedge?

Sure. Sure. So just -- I'll start by just a gentle correction of our hedge levels. We're at about 66%, so roughly 2/3 covered on the year at our present demand and volume expectations. So I think to your question about what we cover, I think, generally, in the ingredients on commodity side, we'll be able to hedge where there are markets. Some of those ingredients cover the long-term contracts, which gets you effectively the same thing. As we look at the logistics side, obviously, we do have long-haul and short-haul trucking contracts in our network. Obviously, with the labor pressures, there is upward price pressure on that entire complex just as a result of the shortage of drivers to get to drive trucks and, frankly, I think, even labor to unload trucks and shipping containers on the other side. So that -- we are covered partially through the contracts that we have. The key is making sure that we continue to execute most of our routes on contract, and we are seeing a little bit of pressure as a result of having to do more sort of off-contract and off-network as a result of the labor shortage and the environment.

Okay. That makes sense. And what happens when a supplier, like, is late or has to charge premiums to you because of logistics challenges? Is that hedged? Or is that not hedged?

No. Generally, no. And that is part of what -- I think one of the things that Jon has spoken to very clearly, this is -- the entire network, incoming and out, is under similar pressure. So that's a place where we do see some incremental operating costs in this environment.

Our next question is from Jonathan Feeney with Consumer Edge.

In the years before the pandemic, I had the pleasure of covering some of the retailers, too, as well as food. And I think the conversation was relentlessly data versus relationships. It was all about elasticity and private label shares and retailers getting smarter, omnichannel, creating more data. And it's basically forcing retailers to change their shelf set more frequently based on all this maybe more quantitative factors than qualitative. And -- but in the past 6 months, it seems like there's this narrative in the industry that it seems that retailers are unhappy with case fill rates. It's difficult to -- and the industry pricing-wise, like it was a very good performance to have a minor -- relative performance to have a minor gross margin decrement year-over-year, but some others are much worse. It feels to me like the pendulum has swung, and now it's -- well, that data is less important. I mean elasticities, to your point earlier, are excellent. Private label shares are in free fall in most of these categories. I mean supply is short. You would think if this were -- you look at the inflations of -- that I lived through in '07 and 2011, like these kinds of indicators would have suggested dramatically more pricing protecting and maybe even expanding gross margin on a 2-year basis, certainly, versus prepandemic levels and better utilization, et cetera. So I guess I wanted your comment about-- is that -- am I wrong about the analytics, first of all? Is that right about that kind of pendulum and the conversation between you and your retail customers? And do you think that in a more normal environment, it swings back to where, hey, more people buying your products, elasticities are good, and that suggest more pricing power over time?

I guess, Jonathan, let me take a crack at the overview and then Jon Nudi, to the extent you want to add on. When I think about the data versus relationships when it comes to retail customers, I think about it the same way as I think about brick-and-mortar retail and e-commerce, which is at the end. And especially in food, where yes, we have [ e-commerce, ] but a lot -- 85% of our e-commerce goes through stores. And so you need to be good at e-commerce, and you need to be good at the physical distribution of products as well, which is why we've talked about connected commerce. The same is true of what we're going through with retail customers right now. Yes, data is important. It will be coming -- it will remain important. Data keeps getting better for our retailers. It keeps getting better for us. That will certainly play a role, but you only trust the data of people you actually trust. And so the retail relationships we have are also important because as we go to market and talk about what's going on in the environment, we need to make sure we have those relationships. So they are both important. As we think about elasticity of demand, we'll see. We're kind of an uncharted territory, to be honest with you. And that's why all elasticity models are always based on historical data, which is usual to a point, but only to a point. And that's why I made the commentary earlier about we're seeing inflation broadly, not only across our products, but also across restaurants as well. And that's why I made the comment about service levels of restaurants and the ability to get labor because it seems like in that environment, it feels like elasticity should hold out pretty well, and they have so far, but we'll see what is to come. Jon Nudi, anything you want to add on either of those topics?

Yes. I mean I think that's well said. The only thing I would add is I think prior to the pandemic, there was a narrative that big brands were challenged. And I would say, first of all, consumers like our brands, and we continue to build them and innovate and build our brands, and that's worked for us. The other thing I would say is for retailers, there's power in having scale. So they can -- a retailer can make a call to us, and we operate across 25 different categories in the U.S. And that's helpful on the supply chain side. We can work in all those categories and really drive scale and make sure that we're operating well to service their shelves. And at the same time, we can focus on capabilities, whether that be connected commerce and digital marketing or e-commerce. So I think retailers are recognizing or have recognized that having powerful partnerships with some big manufacturers is beneficial to them, really streamlines their work. It's good for us, and it's good for them as well.

And speakers, our final question for today will be from the line of Rob Dickerson with Jefferies.

So just a quick question kind of to dissect category dynamics a bit. Obviously, elasticity kind of remains just unknown, but it seems as if maybe there is encouraging light at the end of the tunnel so to speak. At the same time, though, you're saying food at home demand remains a bit elevated. But then we also see cereal, meals and baking decline a bit, which, obviously, isn't shocking relative to the year ago quarter. I'm just curious, as you sit down and you think about the guide and you dissected category to category, like is it fair to say, as we move forward over the next few quarters or so or as mobility increases, that it's rational to think that maybe meals and baking and cereal are still a bit more pressured relative to kind of fluid COVID rates versus snacks and maybe the snacking part of the portfolio actually could continue to perform despite shifts in mobility? That's the first question.

I guess I would say, Rob, that broadly speaking, all of our categories are up over where they were a couple of years ago. And at the same time, you're right, as consumers get to be more on the go, categories that are more on the go have -- we've seen an uptick in those. And for our -- that's our bars category, for example. And whether that's in Europe or whether that's in U.S., we've seen the same kind of trend. But I think importantly, either whether you look at baking or whether you look at cereal, I mean, the trends versus a couple of years ago are pretty good. And the ones that are on the go categories are improving as you suggest. Jon Nudi, anything you want to add to that commentary?

No. I think you hit it. I mean obviously, it's dynamic. And when you compete in as many categories as we do, there's a lot of moving parts. And one of the things that Jeff has really stressed since he's been CEO is that we want to compete effectively in all the categories we compete in. So that's what we're really focused on. And obviously, as Jeff said, snacking has really rebounded, and we're seeing good growth there. And there's big important categories like cereal where, again, over a 2-year basis, we are growing, which is great. And we think there's some dynamics with kids getting back to school and focus on convenience, we'll see that category continue to accelerate, which we sell in August. So we like how we're competing broadly in the U.S. We've grown share in greater than 50% of our business in Q1, and we've done it for 4 years in a row. So again, this wasn't just a pandemic-driven performance. We like the way that we're competing, and we'll continue to focus on that as we move forward.

Okay. Perfect. And then just quickly, I think in the prepared remarks, you stated that it's an ongoing process and search for potential go-forward acquisitions, but then also potential divestments. So I guess, just very broadly speaking, now that we have kind of a time line on yogurt divestment, would you say you're kind of like largely done with that divestment piece of the portfolio optimization efforts? Or are you always looking, let's say, and specifically looking at certain pockets that could still be up for divestment potential? And that's it.

Yes. Rob, I guess, I mean, what I would say is that we're looking to close the [ Yoplait ] transaction at the end of this year, and we just closed an acquisition with Tyson. So we feel good about those things. I would view our portfolio shaping as kind of an always-on capability. I mean, similar, we viewed strategic revenue management -- it used to be episodic until we made it always on. And the same will be true with our portfolio shaping. I'm really proud of what we've done in our base business, not only this quarter, but the last few years. But it's also clear to me that we need to do that and continue to reshape our portfolio. And some of that will be through acquisitions, and I think this Tyson acquisition is a great example of that. And to the extent that we think that investments are better spent in priority categories versus those that aren't prioritized, we'll look at additional divestment opportunities as well. And so we'll continue to compete effectively in the categories we're in, and we'll continue to look for M&A opportunities. I think one of the things I've been most pleased about over the last couple of years is that we've been able to do both effectively. And whether it's the start of Tyson or the way we've done with Blue Buffalo, we're keeping our eye on the ball as we've divested Yoplait. We've done all of that. And so there are some companies that can say that, but I feel good about that combination for us, and we'll continue to look at that into the future.

And speakers, I'll return the call back to you. You may continue with your presentation or closing remarks.

Great. Thanks so much. We are going to wrap up there. Thank you, everyone, for the time and good questions this morning. If you do have follow-ups, please feel free to reach out to me throughout the day. Otherwise, we look forward to speaking with you again next quarter. Thanks so much.

And that does conclude the conference call for today. We thank you all for your participation and kindly ask that you please disconnect your lines. Have a great day, everyone.