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October 23, 2020
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Kellogg pressing forward to preserve progress

Kellogg pressing forward to preserve progress
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BATTLE CREEK, MICH. — Share gains in numerous key categories during the pandemic gives Kellogg Co. confidence the company’s strategic direction will generate growth beyond 2020, said Steven A. Cahillane, chairman, chief executive officer and president.

Mr. Cahillane participated virtually Sept. 9 in the Barclays Global Consumer Staples Conference. Presenting not long after the company issued second-quarter financial results, Mr. Cahillane said the presentation would not include updates of the Kellogg’s financial performance or outlook, but he offered considerable color on progress the company has made in recent months.

He described how the company is “improving our share position while increasing household penetration and how we’re reinvesting more in the second half in order to make sure we are communicating more than ever with consumers who are rediscovering our foods.”

For perspective, he said the company entered 2020 in a position of strength with gradually improving profitability and a strengthened balance sheet from having paid down considerable debt assumed for strategic acquisitions.

The COVID-19 pandemic forced the company into crisis management mode, he said.

“But it also created an opportunity to rise to the occasion and to take steps that will make us stronger in the future,” he said. “It has not taken us off track. “

He described the company’s experience during the pandemic as highly affirming of the strategic path Kellogg had assumed.

“The crisis has come on top of what had already been accelerated sales growth,” he said. “While there obviously is a temporary element to what we have seen from COVID, it is important to remember that we were on a positive sales growth trend even before the pandemic hit. The crisis, far from prompting us to rethink our portfolio, has confirmed that the reshaping we have done in recent years was well worth it. We have seen accelerated growth rates across all core strategic segments of our portfolio during the first half, even as the crisis affected categories and markets differently. This has given us increased confidence in the long-term growth rates we had assumed for each of these strategic segments. In short, the crisis has accelerated momentum in our business.”

The company’s confidence has been bolstered by share position gains, Mr. Cahillane said, crediting efforts in 2018 and 2019 to revitalize the company’s brands and enhancing its capabilities. Year to date, the company has picked up 80 basis points of share in ready-to-eat cereal in the United States, 20 in Canada, 300 in the United Kingdom and 260 in Australia.

“We could show you similar performance in other categories and markets around the world as well,” he said. “In fact, for the first half, we held or gained share in more than half of our largest country category combinations and more than last year.”

Exceptions were in portable wholesome snacks due to industry-wide declines in certain formats and frozen vegetarian/vegan because of capacity constraints and already high penetration relative to the category.

Mr. Cahillane described steps the company is taking to bolster its business in the remainder of the year.

“We’re entering the refrigerated case of the rapidly expanding market for plant-based meat alternatives with a new sub-brand called Incogmeato,” he said. “This not only brings our MorningStar Farms brand into another section of the store, but it enables us to better access an expanded consumer base, the so-called flexitarians.”

The company also has “modified and amplified” its messaging across key cereal brands. He said the company is trying to connect with consumers who have tried Kellogg products, rediscovered its products or repurchased more of the company’s products in recent months.

“With the right messaging at the right time and place, we can convert more consumers to our iconic brands,” he said.

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