Kellogg Invests in ‘Promising Brands’ to Boost Sales

Kellogg is spending more on improvements and marketing for snacks, capitalizing on demand for convenient, on-the-go foods in place of traditional sit-down meals, reported The Wall Street Journal (Feb. 6).

New products like Pop-Tarts bites and Pringles single-serving containers allow Kellogg to capture sales in more places and at more times of day.

“We are leaning into investments in our most promising brands more aggressively than we have in years,” said CEO Steve Cahillane.

The company’s 2019 sales were the best the company has reported since 2012, with comparable sales in the fourth quarter buoyed by snacks in North America, and sales of its frozen products climbing almost 5%.

On the company’s latest earnings call, Cahillane noted frozen breakfast saw some growth from the Eggo brand. Consumption grew slightly year-on-year in the quarter and by almost 2% for the full year. That growth was led by innovation in the French toast and pancakes segments as well as sustained momentum for Eggo’s premium Thick & Fluffy waffles, which grew by nearly 30%. 

Additionally, sales of Kellogg’s frozen products, including MorningStar Farms alternative meats, went up almost 5% during the quarter on a comparable basis.  “Morningstar Farms, our leading brand of frozen plant-based meat alternatives, built on its accelerated growth,” said Cahillane. “Consumption in the fourth quarter increased again at a double-digit rate, again, gaining share. This accelerated consumption and share growth has been driven across product segments.”

The company will enter the ready-to-cook category late in first quarter 2020 with the MorningStar Incogmeato line. Cahillane also noted growth in foodservice and K-12 schools.

However, the company continued to struggle in cereal. Sales in North America fell 1.5% in the quarter. Cahillane said kid-oriented brands such as Froot Loops are doing well, and declines in Special K are moderating, but Rice Krispies and Frosted Mini Wheats are lagging.

“We expect that brand’s performance to improve in 2020 as we return to full support,” he said. “I recognize we talk a lot about our snacks, frozen foods, and emerging markets businesses, and for good reason, but we never lose sight of the fact that cereal is incredibly important to us, and it is our legacy.”

The CEO noted that in 2020, the company will be executing a “full year of commercial activity,” and is planning for more innovation, more brand-building, and more in-store activity.