Kellogg CEO: Innovation means beverages, hot cereals and breakfast sandwiches
Kellogg posted net sales of $3.7bn for the second quarter (Q2) of 2013, up 6.9% on Q2 last year. Net profit was up 7% from Q2 2012, at $352m for the quarter.
Despite these profits, the cereal giant dropped its guidance on the full year given slower growth sales in developed markets, particularly the US. Net sales of the US Morning Foods segment were down 3.3%.
Kellogg continues to feel positive about the long-term growth potential of the cereal segment, despite “disappointing” growth in the second quarter, its CEO John A. Bryant said in the firm’s Q2 earnings call on August 1.
“The good news for cereal is the breakfast occasion is, in general, growing, particularly here in the US. And within breakfast, cereal has the single largest share,” Bryant said. And the innovation plans Kellogg has in this segment move far beyond cereal, he added.
“When we talk about innovation we’re not just talking about another line extension. We are talking about beverages. We’re talking about hot cereals. We’re talking about breakfast sandwiches.”
Plans to redefine cereal
“We recognize the short-term softness in the US and have plans in place to address it in the second half,” Kris Charles, spokesperson for Kellogg told BakeryandSnacks.com.
Kellogg will pump money into advertising and new product development (NPD) in the third quarter, she said.
“In innovation for example, we’re launching Special K Nourish hot cereal. We’re also challenging the traditional definition of cereal, helping consumers see the benefits of cereal in a different form through the recent launch of Kellogg’s To Go Shakes and Special K Nourish bars.”
Bryant said Kellogg is also focused on attracting adult consumers to boost business. The company plans to do this through health-focused campaigns and NPD with this in mind, including Raisin Bran containing omega-3 and a multi-grain Special K, he said.
“On cereals, we’re focused on driving our business the way that we’ve seen the business respond historically, which is through brand building, innovation, both food and packaging, as well as nutrition. I believe that’s the right way to drive the cereal business. Obviously, cereal is always an intensely competitive category.”
