Kashi products, Kellogg
Through innovation and strategic acquisitions, management sees the potential for a brand with sales exceeding $1 billion.

BATTLE CREEK, MICH. — A priority among the Kellogg Co.’s management team during the coming year is to revive its Kashi business. The brand was built around many of the trends currently dominating the food and beverage category, and Kellogg once again sees the business unit’s innovation efforts as a platform for greater growth.

David Denholm, Kashi
David Denholm, c.e.o. of Kashi

“We are going to reinstate Kashi as a leader in the food movement,” said David Denholm, chief executive officer of Kashi, on Nov. 20 during Kellogg’s annual meeting with the investment community. “Our goal is to win back the hearts, carts and minds of ‘holistics’ by reestablishing our identity in the natural foods movement.”

Mr. Denholm, who ran the Kashi business in the 2000s and returned to that role in August 2014, defines holistics as a consumer group that is approximately 11% of the adult U.S. population and who are the most informed when it comes to health and food trends.

At its peak Kashi, which includes the Bear Naked and Stretch Island Fruit Snack brands, did approximately $500 million in sales. In 2014, the brand did closer to $400 million in sales, according to the company. Mr. Denholm has a much loftier sales goal in mind.

“We see a future of strong, sustainable growth and we will selectively pursue acquisitions that help us in the pursuit of our purpose,” he said. “All of this culminates in what we believe is a $1 billion business opportunity.”

To meet expectations, Kashi executives have outlined a three-year plan, which included creating a strong foundation for the business in 2015, stabilizing the business, achieving moderate growth and completing its goal of having the entire line of products be Non-GMO Project verified in 2016, and achieving strong sustainable growth in 2017.

In 2016, Mr. Dehnholm has three goals: to develop market leading innovation, being a thought leader through unique levels of customer engagement, and moving from an exposure to an engaged exposure marketing model.

Innovation on tap

On the innovation front, Mr. Dehnolm and his product development team will be investing in reduced sugar options, plant-based product offerings, gluten-free products with an enhanced nutritional profile and an extension of the businesses Golean line of products.

“This new Golean cereal is a perfect combination of progressive ingredients, popped sorghum, rolled red beans, pea crisps and pepitas combining in a non-soy, gluten-free cereal beaming with positive nutrition,” Mr. Denholm said. “We have had outstanding customer support behind this food and we are absolutely thrilled to be launching that for the New Year.

“To coincide with this launch we have actually developed a new bar with a completely different texture. The texture of this bar is quite unique and it is based on nut butters.”

In 2016, Kashi also will be introducing a line of plant-based powders.

“We’ve seen an increase in the consumption of smoothies, juices and powders in recent years, with holistics but not just holistics,” he said. “So, for us, we think this is a perfect product to advance our purpose. Why? Because most powders are whey based. We are identifying this opportunity as one that is going to be a double-digit growth opportunity. In fact, we think in many years’ time you will see a much greater prevalence of plant-based powders being consumed.”

Mr. Denholm called the plant-based powder formulation progressive, noting that it is not fortified with vitamins and minerals.

“It is actually designed from whole food sources, primarily fruits and vegetables,” he said. “When you think about convenience and people who are time poor, you could make something like this from scratch but you would have to be really good and really efficient at your house and shopping, be it on-line and in the store, to be able to make this kind of nutrition from scratch.”

The plant-based powder products are scheduled to be introduced around April or May. Mr. Denholm said an additional benefit for Kellogg will be the product’s potential on-line.

“Clearly a great opportunity for e-commerce as well when you think about the amount of powders that are sold through e-commerce channels,” he said.

Noting that past cultures consumed more whole foods, less sugar and had a wider variety of products in their diet, Mr. Denholm said the Kashi product development team has been looking to the past for inspiration.

“We think there are opportunities to bring new ingredients to the American diet — just like Kashi did with whole grains,” he said. “We are looking at new grains, new ideas and one we are very excited about is teff, a grass from Ethiopia that is nutritious and gluten-free.”

During the middle of 2016, Kashi will launch a product called Teff Thins. The snack will have zero grams of sugar and feature whole grains, legumes, roasted vegetables, and herbs and spices.

Getting the message out

From a marketing perspective, Kashi will focus its marketing efforts on conversations, content and data to drive brand awareness and convert that awareness into brand loyalty, Mr. Denholm said.

“Kashi is very well positioned in this new world because we have 22 times the number of conversations in on-line around food forwards compared to the average of our natural and organic peer group competitors,” he said. “And in a world where ad blocking is becoming more prevalent we are actually seeing a rise in our engagement.

“ … We are really going to step up our influencer program next year. We are going to seek talk-worthy stories and experiences that emanate from our food and connect those stories with influences to drive new conversations. And our analysis shows we have a reach of at least 1 million people. And then we’re going to amplify those stories and we are going to ensure that our messages are delivered in a very unique and compelling way. And the analysis we’ve done around this suggests and further validates our $1 billion business opportunity.”