BATTLE CREEK, MICH. — It has been a difficult past few years for the ready-to-eat cereal category, but John Bryant, president and chief executive officer of The Kellogg Co., sees signs that trends are improving.
“We’re down around 2% to 3% in the first quarter, which is better than last year,” Mr. Bryant explained during a May 5 conference call with analysts to discuss Kellogg’s first-quarter fiscal 2015 results. “It’s always very dangerous to predict what a category is going to do, but I’d say it’s going to be down in that low single-digit range for the year.”
Mr. Bryant said Kellogg is seeing stronger performance in its business, especially among its top brands.
“Seven of our 10 largest brands under the Kellogg brand gained share in the quarter, and the Kellogg brand itself gained about 30 basis points of share,” he said. “If you look at why some of our business is doing better, Froot Loops grew about 6%, and that’s being driven by some great advertising programs behind consumption, et cetera. The Raisin Bran business was up about 7%. Rice Krispies were up 4%. In the case of Raisin Bran, we had some innovation but also some very on trend advertising as well.”
He said the company also is seeing improved distribution and merchandising after reinvesting back into its U.S. sales force.“Our displays are up in Q1 last year,” he said. “Quite frankly we were down in Q1 last year, so part of it is the comp as well that’s helping us there. And 44% share of innovation is the share of innovation that we like to see in our U.S. cereal business, but not necessarily what we had last year. I think we are seeing some good performance within the cereal business, particularly across the legacy Kellogg brands.”