Kellogg: Cereals and snacks key to global growth
by Eric Schroeder
PARIS — Even while acknowledging the company "must win" in its core markets — the United States, the United Kingdom, France, Mexico, Canada and Australia — that make up approximately 70% of its business, David Mackay, president and chief executive officer of the Kellogg Co., said the company has significant growth opportunities in many other countries, including India, South Africa, Russia and China.
Cereal and snacks are key to driving that geographic expansion, Mr. Mackay told participants during a June 9 presentation at the Deutsche Bank Securities Global Consumer & Food Retail Conference in Paris.
In the case of cereal, the company’s recent acquisition of United Bakers in Russia helped establish a strong footprint in that market with an opportunity to enhance future growth.
"It (United Bakers) is one of Russia’s largest makers of cookies, crackers and cereals, and the addition of United Bakers really does give us the strong distribution and marketing capabilities we are going to need to build a strong presence throughout that particular market," Mr. Mackay said.
Renovation of the company’s cereal portfolio also will be important in expansion. In line with that strategy, Mr. Mackay pointed to Kellogg’s recent announcement it will add fiber to many of its U.S. and Canadian cereals. By the end of 2010 Kellogg expects to make nearly 80% of its U.S. cereal portfolio at least a good source of fiber.
Growth opportunities also stand out for the company’s snacks business. While the company’s Pop-Tarts brand churns out strong sales in North America, Mr. Mackay said Kellogg relies more heavily on its wholesome snacks when it comes to expanding internationally.
For example, expansion of the company’s Special K, Rice Krispies and Nutri-Grain brands contributed to double-digit sales growth during 2008 in Europe, while the acquisition of Chinese cookie and cracker maker Zhenghang Food Company Ltd. (Navigable Foods) in June 2008 gave Kellogg access to a growing marketing and attractive category in China.