BOCA RATON, FLA. — While the Kellogg Co.’s 2020 Growth Plan has served the company well, the Battle Creek, Mich.-based company is setting its sights higher with a new growth agenda unveiled Feb. 21 at the Consumer Analyst Group of New York conference in Boca Raton.
Coined “Deploy for Growth,” the new plan is geared toward taking Kellogg from its current trajectory of 1% growth to a long-term growth rate in the range of 1% to 3%.
“We’re going to bring the same relentless focus to a growth agenda that we brought to reducing our cost structure in recent years, and we’re going to deploy our resources behind growth via investment, via M.&A. and via improved capabilities and execution,” said Steven A. Cahillane, president and chief executive officer of Kellogg.
“Choosing where to play and how to win is the essence of any strategy,” Mr. Cahillane said. “Our 2020 Growth Plan has served us well so far as it has led to some important strategic moves in recent years. But now, it’s time to evolve our strategy to drive more focus on growth, more focus on execution and on investing where the growth is.”
Mr. Cahillane was quick to point out that many aspects of Kellogg’s strategy will not change, including the company’s vision, purpose, heart and soul pillars, and financial guide posts.
“They (vision and purpose) absolutely capture what we are all about,” he said.
What will change, though, are the company’s growth pillars. What formerly was referred to as “Win in Breakfast” becomes “Win Through Occasions”; “Emerging Markets Engine” becomes “Shape a Growth Portfolio”; and “Win Wherever the Shopper Shops” becomes “Deliver Perfect Service and Perfect Store.”
In making the move to “Win Through Occasions,” Mr. Cahillane said Kellogg must shift its mindset away from categories and products to occasions.
“This is the way the consumer thinks, this is the way the consumer behaves,” he said. “This company’s roots are in the breakfast occasion, and so many of our products and categories were developed with breakfast in mind. But ‘Winning Through Occasions’ means delivering the right food in the right packaging at the right time for any particular occasion. In effect, we’ve been moving beyond breakfast for some time, but we have a lot further that we can go.”
To “Shape a Growth Portfolio,” Mr. Cahillane said Kellogg will be investing resources behind the best ideas and brands. To that end, the company fully intends to invest where the growth is.
“We’re already moving in that direction,” he explained. “We’re adding capacity for Pringles in Brazil because growth in the (America) region is outstripping our supply. We see growth in U.S. snacking categories, so we’ve exited D.S.D. to free up resources that can be used to ramp up investment in the innovation and brand building that drives those categories. It starts with momentum brands like Cheez-It and Rice Krispies Treats and it extends further to our other brands.”
He also said the company is pushing into whitespace opportunities, including launching wholesome snacks in Asia and Africa.
“When we invest behind our best ideas and brands, we improve our growth trajectory,” he said.
Kellogg’s move out of direct-store delivery, an initiative that put all the company’s businesses on a single, more efficient warehouse distribution system, fits nicely into the third and final growth pillar: “Deliver Perfect Service and Perfect Store.”
“Retailers are rightly demanding better service, and we are rising to the challenge, because to get to the aspirational perfect store, we have to get to the aspirational perfect customer service, and we’ve been busy on this front,” Mr. Cahillane said. “Project K realigned our network, and now we’re in the process of modernizing and digitizing our plants. We’ve been smoothing out our end-to-end supply chain, taking steps to improve our SNOP process, get better at integrating important demand signals and even trimming our lineup of s.k.u.s. We have a program, called ‘Ingredients for Growth,’ that helps us at finding efficiencies with our retail partners.”
He said the idea of “perfect store” can take many shapes, depending on the channel. He said Kellogg has been building its capabilities and presence in high-frequency stores in emerging markets, ramping up its presence in vending, and expanding in e-commerce.
“Global e-commerce sales grew by more than 40% year-on-year for us in 2017,” he said. “It’s a channel that we can win in, because with our big brands and the capabilities we are investing in, we can reach the coveted first page more frequently than others can.”