Kellogg’s concerns in U.S.
Kellogg, Battle Creek, Mich., set a goal this year of stabilizing its three core developed cereal markets outside the United States: Australia, Canada and the United Kingdom. And while the company was able to achieve that goal, business has fallen flat in the United States.
R.-T.-E. cereal dollar sales at Kellogg in the 52 weeks ended Nov. 5 totaled $2,548,031,744, down 3.9% from the same period a year ago, according to I.R.I.
“The U.S. is a different story this year, and this is disappointing,” John A. Bryant, executive chairman of Kellogg, said during an Oct. 31 conference call to discuss third-quarter results. “After having stabilized that business in 2015 and 2016, we haven’t brought enough excitement to the category this year.”
During the same call, Paul T. Norman, senior vice-president and president of Kellogg North America, discussed the ups and downs of the company’s R.-T.-E. cereal business.
“We’ve continued to gain share in kid-oriented brands like Frosted Flakes and Froot Loops, which have brought to market innovation and brand building that have excited consumers, and we’ve continued to improve our profit margins through effective productivity initiatives,” Mr. Norman said. “Where we’ve fallen short is on bringing enough excitement to our adult-oriented health and wellness brands. This is the segment that is most holding down the entire cereal category’s sales and especially ours. What we have to do is get back to running the playbook that worked well for us before this year, and that is working well for our kid-oriented brands today.”
Against this backdrop, Mr. Norman said Kellogg has several plans for its R.-T.-E. cereal business heading into 2018. First, develop stronger commercial ideas.
“We have new media that will emphasize the health and wellness credentials of Mini-Wheats and Raisin Bran, two brands that simply didn’t have strong-enough brand building this year,” he explained.
Second, the company anticipates a “step change in innovation” next year. Mr. Norman said Kellogg will renovate and innovate against its core, with fresh news on Frosted Flakes, Froot Loops, Raisin Bran and Special K.
“This is bigger innovation activity than this year,” he said. “We’ll also try some new things that are new to the category. These will lean into health and wellness and into convenience.”
Finally, Kellogg plans in the new year to drive bigger in-store excitement with stronger properties and events and programs that leverage the company’s go-to-market model.