BOCA RATON, FLA. — Like several of its packaged food competitors, Kellogg Co. sees a big opportunity in smaller packaging. The Battle Creek, Mich.-based company is introducing small formats from two of its top snack brands — Cheez-It and Pringles — to tap into incremental growth opportunities.
|Paul Norman, senior vice-president and president, Kellogg North America|
“…Cheez-It is a powerhouse; it's our biggest brand in North America,” said Paul Norman, senior vice-president and president, Kellogg North America, during a Feb. 17 presentation at the Consumer Analyst Group of New York conference in Boca Raton. “That's over $1 billion in sales. It's been growing for 19 years consecutively, clicks along at about a 4% CAGR. But the interesting thing about Cheez-It, it is still really a cracker brand that lives in the cracker aisle in a box in a bag.
“There are huge opportunities for us to accelerate growth across Cheez-It if we can put Cheez-It more within arm's reach of more people wherever they shop, where they choose to consume.”
To unlock Cheez-It’s potential, Kellogg is increasing its investment behind the core brand while expanding into new channels and consumption occasions with larger and smaller formats.
“If you ask shoppers or consumers or customers the frame of reference or the competitive frame of reference at Cheez-It, it's not seen by people who buy it as a cracker,” Mr. Norman said. “It’s seen far more as a savory snack. We need to lean in, redefine that frame of reference and drive growth in Cheez-It and source from adjacencies where possible.”
An example is Cheez-It Grooves, a flavored snack cracker with ridges that was launched in the market more than a year ago.
“(It) continues to grow but is not available today in enough of the right formats in enough of the right places,” Mr. Norman said. “The food is a snacking accompaniment food that we think has huge growth if we can unlock its full potential across channels and across occasions through packaging.”
The company is taking a similar approach with Pringles, which has seen growth in international markets since Kellogg acquired it from Procter & Gamble Co. in 2012.
“We've had great success in the U.S., as well; however, we can do more in the U.S.,” Mr. Norman said. “First things first, again, though. We're going to invest more in brand building this year behind Pringles, make sure we've got the core assortment right, make sure we've got the shelf right everywhere we play today with the big can, particularly in the big red can.”
But Kellogg is looking beyond the big red can, too.
“We’ve been investing in capacity, as you know, over the past three years, and we’re lucky enough to have coming on board now capacity in smaller formats in the U.S.,” Mr. Norman said. “So we have small can capacity, and we have those small snack stack formats coming on stream now which opens up new opportunities for growth for us. It opens us up into new channels and opens up into new occasions in terms of lunchbox and on-the-go immediate consumption.”
Kellogg also will continue to launch adjacent products under the Pringles banner, like the Pringles Tortillas chips line, which debuted in 2014.
“When you put these three things together, there's a lot of upside for our brand across channels and occasions and even in the core format, in the core grocery aisle that we already play in,” Mr. Norman said.
Kellogg is applying some of the same strategies to spark growth in its Eggo business, too.
“We're going to continue to invest more and more in the core of the Eggo business, the core syrup-carrying Eggo brand, (and we) have some great new ideas coming through this year in that area,” Mr. Norman said. “We're also going to continue within the breakfast arena to source more from adjacencies. And we've had good success with the Eggo breakfast sandwich over the past year or so and we think we can continue to play beyond sweet into savory with the Eggo business.”
The company is set to expand its waffle lineup with both indulgent and better-for-you varieties.“We will do and we have done some nutrition/health-oriented angles to Eggo,” Mr. Norman said. “We have gluten-free in the market, but our focus going forward is going to be very much more around better taste and some health reassurance. So we have Oats & Berries coming in May this year which is great food, all-natural ingredients, real berries, and we feel good that that's going to be a big step up for the brand.”