BOSTON — While much of Kellogg Co.’s presentation at the Barclays Global Consumer Staples Conference had to do with the upcoming spinoff of W.K. Kellogg Co. and Kellanova, an interesting peek behind the curtains was provided into the company’s operations in Africa, a market with less visibility but one that in the words of Steven A. Cahillane, chairman and chief executive officer, “really is a fantastic business for us.”
Mr. Cahillane gave much of the credit to Kellogg’s success in Africa to Amit Banati, currently chief financial officer of Kellogg Co. It was during Mr. Banati’s tenure as president of Kellogg Asia Pacific, Africa and Middle East (AMEA) in 2018-19 that the company adopted what Mr. Cahillane described as “the affordability pyramid.”
“Historically, if you go way back to when we first went into Africa, we went into South Africa with cereal,” Mr. Cahillane said. “All the way back to Mr. Kellogg’s days and had to really develop the habit for breakfast cereal, and it is a very premium product. And so it’s a natural limit on what you can achieve.
“And so what we’ve done in Africa is, since then in Nigeria and the rest is in this affordability pyramid, we start with something that maybe (is) two times the cost of a local kind of untraditional food and go up the pyramid from there with Pringles being at the top. And then we really focus on route-to-market.”
Kellogg took steps to improve its route-to-market in Africa when it acquired a 50% stake in Multipro in September 2015. Multipro is the largest distributor of food products in Nigeria and Ghana. With its ownership in Multipro Kellogg has effectively built a “moat” around Africa, Mr. Cahillane said.
“We get to every single traditional point of sale that you wouldn’t be able to get to without the scale that Multipro gives you,” he said. “And so we are now the largest food company in Nigeria. We’re a staple item to African consumers. It’s the last thing they would cut from their shopping list. And so you have to think about that as an integrated business with Multipro being what we consolidate, but it is a very, very powerful and necessary route-to-market advantage that we have. We’re applying that into Egypt, Saudi Arabia, South Africa as well.“We’ve launched Kellogg’s noodles now in the Gulf Coast states as well as South Africa, and that’s off to a very good start. (We are) the No. 2 noodles brand now in Africa.”