On December 2, 2025, the San Francisco City Attorney’s office filed a lawsuit against General Mills and other major food manufacturers, alleging that the companies engaged in unfair and deceptive acts by marketing and selling ultra‑processed foods. The suit claims that the firms violated California’s unfair‑competition law and public‑nuisance statute by promoting products that contribute to unhealthy diets and rising healthcare costs.
The complaint targets General Mills’ portfolio of packaged foods, including well‑known brands such as Cheerios, Pillsbury, and Progresso. It accuses the company of knowingly engineering and marketing addictive, harmful products to maximize profits, thereby imposing a public‑health burden. The city seeks court orders to halt deceptive marketing practices, require corrective actions, and impose civil penalties.
General Mills’ recent earnings provide context for the lawsuit’s potential impact. In Q2 FY 2025, the company reported net sales of $5.24 billion, up 2% year‑over‑year, and adjusted earnings per share of $1.40, beating analyst expectations of $1.22 by $0.18. The beat was driven by higher pound volume and a favorable mix in North America Foodservice, which grew 8%, offsetting a flat North America Retail segment. However, the company lowered its full‑year 2025 earnings guidance to reflect increased promotional spending and the uncertainty surrounding the lawsuit. CEO Jeff Harmening emphasized that while the company is investing to bring consumers greater value, these investments will temper short‑term profitability but position General Mills for sustainable growth in 2026 and beyond.
The lawsuit has already influenced market sentiment. General Mills’ shares fell to a 52‑week low of $45.79 on the day of the filing, reflecting investor concerns about potential legal costs, reputational damage, and the possibility of future regulatory restrictions on ultra‑processed products. The decline was amplified by the company’s Q3 FY 2025 earnings report, which missed revenue expectations and signaled a 5% decline in organic net sales, underscoring the broader headwinds the firm faces.
The San Francisco action is part of a growing trend of legal challenges targeting the food industry’s role in public health. Similar lawsuits have been filed against other manufacturers, and the city’s case is described as the first government‑led action of its kind. If the lawsuit proceeds, it could set a precedent that forces General Mills and peers to reformulate products, alter marketing practices, and potentially face significant civil penalties. The outcome will likely influence the company’s long‑term competitive position and could accelerate a shift toward healthier product lines.
In summary, the lawsuit represents a significant regulatory and reputational risk for General Mills. While the company’s recent earnings show resilience in core segments, the legal action and associated market reaction highlight the growing scrutiny of ultra‑processed foods. Management’s focus on strategic investments and cost control will be critical in navigating the potential financial and operational impacts of this litigation.
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