BATTLE CREEK, MICH. — Slipping sales at Kellogg Co. in ready-to-eat cereal moderated during 2018, as the company navigated a supply chain disruption that kept Honey Smacks off shelves for most of the second half while simultaneously finding ways to stabilize key brands and move ahead on line extensions.
One area of success in 2018 was Kellogg’s emphasis of its wellness credentials, especially in the adult R.-T.-E. cereal segment. Steven A. Cahillane, chairman, president and chief executive officer, told analysts during a Feb. 7 conference call that Kellogg’s efforts were effective in stabilizing key brands like Raisin Bran and Mini-Wheats in 2018. He said the company expects to remain focused on wellness as part of its innovation and communication efforts in 2019.
Innovation also played a key role in share gains for Frosted Flakes and Froot Loops, which fall under the company’s “taste/fun segment.” Mr. Cahillane said Kellogg expects continued momentum in the category in 2019 as the company introduces several new products and incorporates communication that taps into the rapidly growing portion of cereal consumption that is out of breakfast for snacking.
Kashi was a big winner for Kellogg in 2018, Mr. Cahillane said.
“While we have been performing well in natural channels for some time, Kashi consumption in the xA.O.C. (extended all outlet combined) measured channels turned positive in 2018, thanks to strong innovation and effective messaging,” he said. “Innovations like Kashi by Kids and new offerings under the GoLean line are gaining traction.
“As you can see, this turnaround was especially pronounced in the second half. So Kashi carries some good momentum into the new year, and we have great plans for 2019. Meanwhile, we also grew consumption for our rising granola brand, Bear Naked, and we have innovation coming for that brand in 2019 as well.”
Finally, Mr. Cahillane said, Kellogg is embarking on an ambitious plan to harmonize pack sizes and make the cereal aisle more shoppable.
“Where we’ve done this, most recently in Europe, we see improved results,” he explained. “This work will be executed across the first half of 2019... I wouldn’t count on growth for North American cereal in 2019, but we will continue to moderate its decline, getting back toward stable long-term trend.”