That's it. It's truly awesome to see so many familiar faces once again. We also welcome some of the new faces that have joined our Staples family this past year. I'm Andrew Lazar, and I cover the U.S. Packaged Food Space here at Barclays. As usual, we've got a full complement of Barclays Global Staples coverage here, including Lauren Lieberman on U.S. Beverages and Household Personal Care, Warren Ackerman, European Food and HPC, Alex Sloane, European Ingredients, Patrick Folland, European Beauty, Ben Troyer, America's Agri Business and Fertilizers, Laurence Whyatt , European Beverages, Gaurav Jain, Global Tobacco, and of course, Rupert Trotter, Global Consumer Staples Industry Specialist. As I mentioned, this conference is on its 34th year.
I won't try to guess the number of inflationary or emerging markets growth or commodity cycles that we've discussed over those years, but surely it's the enduring nature of the Staples industry that has allowed our conference to remain as relevant as it has, keeping its annual placeholder on everyone's calendars, but also to grow as it has. This is a team effort, and we appreciate all the hard work that our management teams have put in to make these onstage sessions and meetings possible year- after- year. The same goes for our incredible Barclays Events team. We hope everyone is well rested and well caffeinated, as we're pleased to host another year with a great lineup and really look forward to all the listening, questioning, and thinking that is to come over the next few days.
In keeping with tradition, our entire team will be easy to find over the next two nights at the hotel lobby bar, Filini . Also, tomorrow, once the content concludes for the day, we'll be hosting a reception at Matria, a private dining room and terrace on the first floor of the hotel. On Thursday, at the close of the conference, Boston Beer will host their annual reception. There are plenty of opportunities outside of the more formal conference sessions to catch up, compare notes, and engage in the fun and healthy debate that makes what we do so much fun. As always, we appreciate any feedback about what you like about the conference and what can be improved going forward. With that, I'd like to introduce our first fireside chat with the management of General Mills.
With us today are CFO Kofi Bruce and Dana McNabb, President of both the North America Retail and Pet segments. Welcome to you both, and thanks for joining us today. I'm going to hand it over to Kofi first for just a couple of opening remarks, and then we'll jump into sort of the Q&A. Over to you, Kofi.
All right. Thank you, Andrew, and thank you, Barclays team, for hosting this event. We're pleased to kick off. It is obviously an interesting time in Packaged Food, despite valuations. As I take note of where we've been, we've seen five years of really strong growth through fiscal 2023, part of which was punctuated by once-in-50-year inflation. Where we encounter the consumer now over the past two years is a consumer who's feeling more constrained and a lot more value-focused. As we think about our fiscal 2026 priorities, we remain laser-focused on organic sales growth, with the overriding belief that in the long term, the most sustainable way to drive value in packaged food and to create value for shareholders is through organic sales growth. It is the most highly correlated driver of long-term value creation in our space.
When aided with modest portfolio shaping, it leads to long-term value accretion. Our focus as we step into 2026 is restarting volume-driven organic sales growth in our North America retail business, driving dollar share growth and dollar growth in our Pet business, and creating the resources and flexibility to fund that growth. Part of that requires us addressing the consumer's needs on value. We are investing to make sure that our prices are accessible, that we address price gaps to private label and get them more in a sustainable range, address price cliffs places. That is not the sufficient work necessary to restart growth. We also fundamentally are seeing a step change in investment and innovation. We have product news on all 10 of our major categories in North America retail, significant news coming in our Pet business.
We're doing the work underneath our remarkable experience framework on the core execution of demand driving, which fundamentally is the terrain which will differentiate winners and losers in the environment ahead. Where do we find ourselves? We are approaching the end of we will be reporting earnings here at the end of our Q1 here in a few weeks. While I can't characterize those, I will say if we look at our Nielsen-measured results, we are seeing pound share growth in eight of our 10 categories in North America retail. Seven of our 10 key categories have seen improvement since Q4 in pounds. Those signs give us confidence that the work we're doing is paying off. In addition, we saw real good progress on some of the price correction and price investment we made, as well as investment in marketing ideas halfway through our last fiscal year.
In combination with the progress we're seeing here in this quarter on our measured results, we reaffirmed our guidance for the year. With that, I'll turn it back over to you, Andrew.
Perfect. Thanks, Kofi. I know many in the audience are going to be heavily focused, obviously, on the current environment, and we'll have plenty of time to talk about that. I want to take a step back a bit first, talk about your long-term goals. You've mentioned in the past that you believe holding share across your current mix of categories and geographies will generate organic net sales growth squarely in the middle of your 2%- 3% long-term target. I guess what gives you the confidence and the ability to grow in line with that top-line algorithm moving forward in what's still obviously a very dynamic operating environment the past few years? I guess how is that confidence different today than maybe where it was a few years ago based on what you've added in terms of capabilities, portfolio changes, and brand support?
Good morning, Andrew, and thanks to you and your team for hosting us today. I would say our confidence in being able to get to that 2%- 3% growth rate stems from three things. First, it's the work that we've done to reshape our portfolio towards more growth orientation. Second, it's the work that we've done to amplify our brand focus through the remarkable experience framework. Third, it's really investing in capabilities to secure our future. I'll talk a little bit about each one of those. I'd say on portfolio shaping, we have made tremendous progress over the last eight years. We've turned over 30% of sales through acquisitions and divestitures. You know that we have acquired into the fast-growing pet segment with Blue Buffalo, Edgard & Cooper , Whitebridge. We've divested businesses like yogurt and our side meals business that were dilutive to our ability to grow.
The result of all of that work is that we've added a point of growth orientation to our portfolio, which gives us confidence that we can get back to the 2%- 3%, even though at this time, candidly, our categories aren't where they need to be. I know we'll talk about that later in this discussion. Reshaping the portfolio towards more growth orientation, that is working for us. We're focused on amplifying our brand building through what we call the remarkable experience framework. We want to drive category growth and capture our fair share of that growth. I am convinced that we can hold or grow share in our categories by focusing on remarkability. What we've done is we've benchmarked our peers, P&G being one of them, and developed what we call the remarkable experience framework. It's really simple.
We measure how our brands perform against the competition across five key measures: product quality, packaging, omnichannel execution, communications, and of course, price value. What we know in using this framework is brands that consistently beat the competition in three or four of those measures will deliver sustainable penetration and share growth over time. We had work to do. When we measured against the competition, we weren't winning in enough areas. That's been a place we've been focusing on to get back to organic growth. The last area that we are investing in is strengthening our capabilities. I am convinced that those companies that invest in a world-class digital capability will be winning in this environment going forward. That is not investing in digital just to say it is a buzzword for digital sake.
It is about really strengthening our digital foundations and using those foundations across the value chain, so supply chain, marketing, strategic revenue management, our business processes. We've invested significantly in digital since about 2019, and we're in a place now where we're really starting to see some return from that investment. I'll give you a few examples. Where we've been able to deploy AI and digital across our supply chain, we've been able to increase our cost savings from our holistic margin management program to 5% of cost of goods. That's up from 4% historically. We've invested to have a leading position in e-commerce, and when I look at our North America retail business right now, our e-commerce sales are about 18% of our total sales. That's up from 4% pre-pandemic.
Of course, AI and digital innovation is critical in terms of how you market, having better insights in order to target consumers, get to personalized experience, have social-first marketing where the consumers are talking about our brands for us. I think the combination of this focus is going to allow us to get at growth, both growth and efficiencies, better than others. When I think about portfolio shaping, I think about our iconic brands, our capabilities that we're developing, our great team. I think we're poised to be one of the winners going forward and get back to that 2%- 3% growth.
Got it. Sticking with the industry environment for a moment, I think it's pretty well understood at this point, right? The industry volume recovery has been both longer and more expensive than was initially expected. Your fiscal 2026 outlook is consistent with this theme. I guess first off, I know this is a harder question to answer, but to what do you attribute that weakness from an industry volume perspective? How do you compartmentalize to what extent, if at all, some of this has been driven by more structural factors versus things that are maybe either more one-off or cyclical in nature?
Yeah, I think first let's start with just giving some context on our categories. If I look at our categories, our volume is flat. We have a little bit of dollar growth due to price mix, and that's below expectations for the long term. If I look at volume growth being flat, we expect in our categories volume growth to be about 0.5% and keep in line with population growth. We have work to do to improve them, but we're not far off. When I think about the industry and what's happened to volume, I think we have to acknowledge the fact that we had a hyperinflation period. If we were here talking two years ago in 2023, we were talking about the fact that commodities were up 30%, we'd increased prices 25%, but we were only seeing volumes decline 5%. We kept talking about why.
I think in retrospect, what we've seen is that the consumer is struggling with value, and we're starting to see those volumes unwind because they're adjusting to that hyperinflation period. There are a couple of other things that are impacting our industry. I'd say whenever the consumer is struggling with value, we do see a shift back to cooking from scratch. We are seeing some of the perimeter protein and vegetables increase. We're seeing beans and rice increase, broth, because you're making meals from home. We're seeing people make those meals last longer than just one occasion. They're typically stretching it to three meals. It also would be remiss of me not to mention GLP-1. We know 12% of adult consumers are on GLP-1s. We do think that will have an impact on food.
At the end of the day, we think the biggest driver of the volume slowing down is the fact that consumers are still adjusting to inflation and are in a value-conscious period. That doesn't mean that there isn't growth everywhere, though. I want to really talk about the fact that in almost all of our categories, we see a couple of benefit areas that are driving growth. We're seeing better for you, a focus on protein. That is growing really fast. Bold flavors, if you can bring more flavor intensity to your products, that's growing. It's tough out there for consumers. Anything that's nostalgic and brings a little bit of comfort, that's growing. What you'll see us focusing on is every innovation we're bringing to the marketplace will deliver against one of those benefit areas because there is growth to get.
Dunkaroos is my go-to. We're talking nostalgia.
Go-to nostalgia.
That's what it's about.
Yeah.
You stated your main objective this year, or this fiscal year, is to restore volume-driven organic sales growth. However, taken in complement with your FY 2026 guidance, which looks for an operating profit decline of 10%- 15%, one might question whether you're aiming to sort of drive volume at any cost, so to speak, or instead investing responsibly in areas where you feel the consumer is sort of ready to be engaged. I guess, can you remind investors of some of the puts and takes that are driving that expected decline in profitability? Which of those drivers do you view as more temporary versus maybe somewhat more structural?
Sure, sure. I appreciate the question, and I always have the opportunity to put that in context. I think the first important thing to note is we have some unusual factors weighing on this year's profitability. Investment is a much smaller portion of that on a net basis. Our divestiture of Yoplait, which we just completed the U.S. portion of that divestiture at the end of June, is about a 5% drag on operating profit. In addition, we have a 3% drag from the reset of our incentive compensation off of last year's much lower-than-planned performance. Those two factors will be more transitory in nature. Included in that 5% for Yoplait is about half of the stranded costs, which will not come out this year, which I'd expect to work out in the following year.
As you work through it, that leaves you a low to mid-single-digit decline in profit taking out those factors, which includes a significant amount of cost savings as a partial offset to fund that, $100 million at a minimum of transformation initiatives, in addition to 5% industry-leading cost of goods sold. We are, to your point, being responsible, measured, and targeted, and at the same time, recognizing the environment, realistic about the level of reinvestment needed to restart organic sales growth. Over the long- term, I would expect that restarting organic sales growth led by volume with a stable top line will bring leverage and stability back into the business and also help us put ourselves back in a position to start clawing back margin.
Great. Kofi, sticking with you for a minute, given there are quite a few moving parts that you'd noted on your fiscal fourth quarter call, I think it might be helpful as a reminder for the audience if you could just remind everyone how you're thinking about the phasing of this fiscal year.
Yeah, on our fourth quarter call, you may recall, we outlined that we expected to see volume improve ahead of dollars, largely reflecting the fact that in addition to investments we'd made in reducing prices last year, we were making additional investments on up to two-thirds of our North America retail portfolio. There's a phasing impact as we work our way through that and lapping the investment from last year, which as we recognize the trade last year late and at the end of last year, we will see that be a drag on the front part of our year, first half of our year on the top line as well as the bottom line.
I would expect as you work your way into the second half of the year and in particular towards year end, we would see the impact of the 53rd week lapping that trade phasing impact, the bulk of which we saw in Q4 really boosting the tail end of our second half. Those are kind of the big drivers.
I guess what do you view as some of the more significant risks or opportunities that you see that would allow General Mills to either outperform or on the other end underperform where your full year guidance is, which at the midpoint calls for flat year-over-year organic sales?
Yep, I appreciate that. I would put at the top of that list volume. That is the single biggest probably determiner between the low end and the top end of our range. Obviously, in this environment, we'd expect the investments we're making to pay off, but we're also measured about the fact that some of those may take a little bit more time to realize or the risk and the consumer response might be a little slower than we projected. That would be kind of driver number one. Secondary, I'd put in that category, we see stability in our overall core inflation. Tariffs, as a reminder, we flagged as an additional kind of 1%- 2% drag on top of the 3% core inflation. There's been a little bit of volatility at the risk of maybe understating in the tariff picture.
Our expectation contained within our guidance is that we have enough net levers to kind of offset a portion of that, but to the extent that we can't offset all of that, that would provide some modest additional risk and volatility that might push us to the lower end of our range. Those are kind of the core drivers. We're feeling really good about our delivery at 5%. We likewise see really good line of sight to the $100 million of transformation-related benefits. That part of the guidance, we feel very, very confident about. It's those other factors that drove the width a little wider than we might normally give guidance.
For the better part of the past year or so, you've been very open about the fact that you've seen categories pretty close in your key North America retail segment to where you'd want them to be and have stabilized on volume. Your own level of competitiveness in terms of market share has not been up to par. What's been the reason for the more challenging competitiveness this past year outside of simply price investments? What else are you doing to improve the competitiveness and better deliver the value that the consumer is looking for?
You're right. We weren't competitive enough last year. I think the reason why really comes back to this remarkable experience framework, where we simply weren't good enough relative to the competition in many of our categories. We have really focused on that. We're making a meaningful step change in our investment in product quality, in advertising, in everything that we're doing across the framework. Yes, price investment was one of those things. What we saw that we had to do was really look at our shelf prices, and we had to adjust our gaps relative to competition. In most cases, we had to look at cliffs. Where we exceeded key cliffs, we had to get back under that. We invested in about 1/3 of our portfolio price value in fiscal 2025, and our goal is to have about 2/3 of our portfolio covered.
We'll have that by the end of our Q2. We've made those investments, but as Kofi said multiple times, price just isn't enough. It's not just about price. We are investing in all the other areas of the remarkable experience framework. Let's talk first about product quality. Every single one of our top 10 categories will have product news this year. We will have Pillsbury biscuits that bake up bigger and provide more value. We have more intense flavors on our top three brands per check. We have 35% more chicken in our Old El Paso soups, so news that we know will resonate with consumers. We're making a meaningful step change in our new products, so our new product sales will be up 25% this year.
These are products like Cheerios Protei n that is a runaway hit, Pitmaster soups that are high protein, taste great, barbecue flavored, Mott's Fruit-Filled Bars. We're launching a Totino’s Ultimate Pizza that's fantastic, really stepping up investment there. Price pack architecture is very important in our environment right now. We're going to have double the price pack architecture we had in the plan last year. Our seasonals are up 50% because what we know is parents just won't give up on fun and nostalgia for their kids during the holidays, so 50% more seasonal. We've increased our advertising across all of our biggest businesses and refreshed our campaigns. We have stronger in-store events, and we keep investing to maintain our lead in e-commerce.
What I hope you're hearing from us is that we really believe that focusing on being better than the competition is the way to get back to organic sales growth. Where we did this in the back half of our last fiscal year, we saw a strong return on investment, and the early part of our FY 2026 and Nielsen is proving out the way we thought. We'll continue this focus.
The big news on the last earnings call was certainly about your planned entry into the fresh pet food category. I've got a number of questions here. Hopefully, you'll indulge us. It's a hot topic. Obviously, preceding this launch, you had dipped your feet into the fresh category with some testing about two years ago. I guess what were some of the key learnings from those tests that you're sort of addressing or that have helped inform how you address this launch this time around?
You are right. There is a lot of excitement about our fresh launch. I do feel obligated to mention that returning our core $2.5 billion business back to growth is also a priority in addition to launching fresh. I hope we will talk about that later on in this discussion. You are right. We did do a test in fresh two years ago, and we learned a lot. What we learned is that the Blue Buffalo brand has a right to win in fresh and can succeed there. We learned that pet parents really liked our products. We had great quality products. We also had some challenges that we learned from. You need to be able to build trial and awareness. It is hard to do that when you do not have scale.
When you do not have that awareness and you do not have scale, it is hard to get efficiencies in your supply chain. We did the test to get real-world learnings, and we did get that. We have used it in order to strengthen our proposition that we are launching now coming in Q2.
Great. In the past, I know General Mills had been somewhat hesitant to jump into the fresh arena in any sort of meaningful way. I think the company had been uncertain about what it would take to compete in the space profitably, what level of investment might be required in terms of capital and marketing to achieve the proper scale, all in light of other uses of capital in categories in which the company could likely generate a greater level of profit dollars much more quickly. I guess what's changed such that now is the right time to make this leap?
First and foremost, the fresh segment has continued to grow double digits. It's a $3 billion category right now. We project that to be $10 billion within the next 10 years. Obviously, we want to participate in that growth. We think Blue Buffalo has a right to win and capture our fair share of that growth. It's an exciting segment. As we've talked about, we really believe the Blue Buffalo brand has a right to win in this category. It is the most loved and trusted natural pet food brand in the U.S. We know humanization and premiumization of pet is going to continue. We know Blue Buffalo has a right to win in this segment. We also think it's going to really help our kibble business. What we know about consumers who use Fresh today is they also use it with kibble. 80% use it with kibble.
They either mix it or they use it in a topper. Half of those consumers are looking, they'd like to buy both the Fresh and the kibble from the same brand. When we put all those factors together, we think the time is now for us to launch into this segment.
I think the big difference between some of the testing you've done in the past, as you mentioned, and the launch this time around is the scale that you're coming to market with. Can you elaborate a bit about what that's going to look like in terms of product variety, retailer, and geographic breadth, and the level of investment that you'll be putting behind in support of the launch?
You're right. We're launching in this segment to be a real competitor, and that means scale. This is a national launch draft. It's not a test. We have secured distribution in food, drug, and mass retailers across the country. We plan to be in about 5,000 coolers by the end of our Q2, and we'll continue to build distribution into calendar year 2026. It's not just distribution that's different in terms of scale this year. If I look at the products that we're bringing, we're bringing a better breadth of products. We're going to have tubs, and we're going to have rolls that we bring in. We have a great product pipeline that's going to be coming over the long term. We are going to have very strong in-store activation, leveraging the Blue Buffalo equity and blocking at shelf and having really good in-store presence.
We're going to invest in national advertising for the launch at the start of Q2. We really believe that we have improved this proposition. We are coming with scale and that we can have success. We have just started to produce the product. Kofi and I saw products a couple of weeks ago. They're fantastic. We're starting to install coolers now, and we'll start to ship nationally. We're getting great reception from retailers and pet parents about the product.
How will the distribution of coolers work? Will you own the coolers in stores, or will the retailers own the coolers and allocate space as they see appropriate? Will it sort of be a hybrid approach depending on the customer?
It really depends on the retailer. We have been partnering with each retailer to come up with solutions that meet what their long-term vision is for this pet segment. In some cases, we own and install the coolers, and in others, the retailers own and install the coolers and will be in their cooler. It really depends.
Yep. I guess one concern around the launch into fresh, just given the breadth of the launch, right, and the fact that this is a new product type that might require different manufacturing processes from what you currently do, and your ability to mass produce the product, consistently meet demand without a hitch, how are you ensuring this does not become an issue? How much of the fresh product is produced internally versus through co-packers, I guess both initially and then your expectation further out?
We have a tremendous team. We have really strong internal expertise combined with strong external strategic partnerships for supply chain. I think what we can forget sometimes when we talk about pet is that General Mills has expertise in refrigerated with all of the big businesses we have like Yogurt and Pillsbury. We're able to leverage that expertise in this segment really well. Initially, when we launch, we're going to be using external supply chain strategic partnerships there in order to make the product. We'll evaluate that over time as we start to get to scale.
Got it. Two more in fresh, and then we're going to get to a broader pet. I promise. Given a lot of the investment behind the launch is going to be incorporated into the P&L this fiscal year, and I know it's a multi-year investment time horizon, whereas the payoff might take certainly a bit longer to be reflected, how should we think about the impact this could have on pet segment profitability closer in versus how accretive or diluted we'd expect the fresh product to be to the pet segment profitability over a longer period of time?
Sure. I'll take that. If you think about it, I would expect a couple of years of investment as we build to national scale. Part of our assessment post our first test was what does the business model look like at scale? We do see a line of sight on a national-scaled business to profitability and profit margins that would be at least in line with the company average and potentially over time may be higher.
Got it. I know we're still in the very sort of preliminary stages of the launch, but I'm wondering what success would look like from your vantage point in this business. What metrics will we be tracking most closely over the next, call it, year or two? That would indicate whether things are going according to plan. If we were to zoom five years out at a high level, what do you hope to have accomplished by then within the fresh subsegment?
As I think about our fresh business, we really believe that the initial metrics that we're going to focus on are trial, their repeat, and their penetration. Simply put, the more households that we can bring into this Blue Buffalo brand, the more we'll have confidence in the scale and the profitability of this business. Over the long term, what I expect is that we are a business that can help drive this segment growth and that we'll capture our fair share of that segment and that we'll have a really strong share position. We believe that this can help grow our dry kibble business. We expect over time that as fresh grows, so will dry kibble. We'll have a really good position in dry Pet feeding, in wet Pet feeding, and in Fresh.
Outside of the launch into Fresh, there's obviously been a lot going on in your existing pet portfolio over the last couple of years, with pet segment organic sales having declined about 4% in fiscal 2024 and then slightly up in fiscal 2025. Dana, this is obviously a part of the business that you've more recently been named the Group President of. Maybe you can share your initial perspective on the current shape of the segment, where you might see some opportunities for improvement, and I guess how you'd frame the long-term growth potential of the segment and how it might look in the years ahead.
I think that there's huge growth potential in pet, and I am really thrilled to be part of this team. I think, Andrew, as you rightly pointed out, we did return our pet business to moderate growth last year. That was largely behind our Life Protection Formula business, where we regained share behind focusing on our ingredient superiority messaging. Moderate sales growth is not the goal for this business. We need Pet to be leading growth for General Mills, and we expect to get this back to mid-single-digit growth. Where we're focused, if we look at our business now, we're seeing that our cat business behind Tastefuls is growing really well. We're seeing Life Protection Formula continue to perform the way it did last year, and we've seen our treats business start to inflect in growth moderately.
The two areas that we have to improve are our Wilderness business and also how we're performing in pet specialty. To bend the curve on those two businesses, it's really about focusing on superiority, like I have been talking about. We've got meaningful product news coming into the marketplace, we're increasing our advertising, and we're going to improve our in-store execution. In addition to the fresh accelerator, we have a couple of other accelerators that we're excited about. As you know, we've acquired Whitebridge, the Tiki brand in Cat. That is wet cat food that is growing double digits. We also acquired the super premium brand Edgard & Cooper in Europe, and we're going to bring that to the United States in an exclusive partnership with PetSmart in order to strengthen in the pet specialty channel.
I think the focus on the core business and news that is relevant to consumers in addition to these accelerators will help us get back to that mid-single-digit growth. I'm confident in what the team's working on.
On productivity, you've stated that you have good visibility to delivering another year of 5% as a percent of COGS in 2026, which is higher than your 4% long-term trend. You recently launched a global transformation initiative that's expected to generate an incremental $100 million in cost saves on top of that. I think for those of us that have covered the industry for a longer period of time, these types of figures sometimes bring back concerns around the potential risk that overly aggressive cost saves can cut into demand-building efforts or, worse yet, quality. Can you maybe shed some light around what sort of cost-savings initiatives you're pursuing with these efforts and how you ensure that the brands are getting their proper support?
Let me start first with a recognition of what's at the core of our discipline. This is a capability in the organization built around the idea of eliminating waste in places that don't impact the consumer experience. That is the first inviolable rule of how we seek our productivity. The key thing is, as I look at kind of my 16-year tenure with the company, for most of that period, we've been asked, are you going to run out of orchards to pluck new ideas? Won't you have to start degrading product to find them? The reality is the discipline and the capability built around continuous improvement has led us to find 4% year- over- year. Digital and data investment has actually allowed us to accelerate the past two years and onto our third year in the ways that we find waste.
We've been able to optimize production, optimize our network and placement within our network through AI-enabled tools in ways that none of that impacts the consumer experience with the product. More importantly, you asked a little bit about our cost-savings initiative. That is really more focused on a big chunk of that's focused on end-to-end processes, on things that impact the way we work behind our functions and how we connect them up with the business. All of that is done with a focus on ensuring that we free up resources to invest back into product, into messaging, into promotion, and all the things that fundamentally are going to differentiate winners from losers in this environment.
Turning to capital allocation, you finished fiscal 2025 a bit above your long-term leverage target of 3x , but we've seen some increased M&A activity in the space of late. How are you thinking about prospective M&A moving forward? Are there certain categories or geographies that appeal to you more so than others? Are you more inclined to do more bolt-ons, or are you more open to more transformative deals?
I will first give the caveat I always give, which is I would never rule anything out. I think if you look at our always-on portfolio capability, we have generally been doing M&A transactions in the range of $1 billion- $2 billion, mostly managing the leverage impact of that by pulling back a little on share repurchase to allow leverage to reduce over a relatively short period of time. That's actually one of the goals we have this year. We would expect we've already deployed some portion of the proceeds from our Yoplait divestiture. In fact, most of the proceeds from our Yoplait divestiture towards debt repayment in order to bring leverage down. We do see the balance sheet as a source of strategic flexibility.
I can't get too specific about categories other than to say if you look at kind of where the focus has been, we've found a significant amount of growth opportunity within Pet and the expansion of that platform. We've continued to look at opportunities around our food service perimeter. Our job at the end of the day is to reshape the company's growth exposure. Over the 7+ years since we acquired Blue Buffalo, we've taken our growth exposure, meaning if we grow in line with the long-term projections of our categories, from about 1% to 2% to 3% that Dana referenced earlier, as a result of reshaping about 30% of our sales. We view this as an always-on capability. This is an environment where we're absolutely not turning it off. At the same time, we're hyper-focused on ensuring that we drive organic sales growth improvement on the core.
Right. OK. All right. I think we're out of time here in the fireside. It's a good point to close it out here. Please join us over in the breakout and join me in thanking Dana and Kofi for being here today.
Thank you.
Thank you.
Thank you.