Food Business News - February 12, 2013 - (Page 16)

Kellogg frozen foods business on the fast track Company focusing on innovation to continue to provide healthy options to consumers Continued from Page 1 have only recently been introduced, but we’ve seen great retail acceptance, and strong velocity.” Another breakfast item contributing to growth has been the Eggo brand, which Mr. Allen said has exhibited “very strong rates of all family consumption.” “This has been increased by the introduction of several innovations, including thick and fluffy waffles, which have been a huge success, and more recently, Wafflers,” he said. “These are really strong results, and they are a testament to all the hard work the team did last year.” Despite offering fewer stock-keeping units than it has in the past, Mr. Allen said Eggo’s share of the waffle category is at an all-time high. “Eggo is a very attractive brand that responds very well to brand building,” he said. “As a result, we’re continuing to make significant investments, including in the digital space. Eggo is one of the strongest equities at Kellogg, and we continue to see penetration upside. This brand has grown historically behind the line of ‘Leggo My Eggo.’ And because the brand is so popular, we get great support from our customers.” He added most of Eggo’s sales are base sales. “In fact, this is a category that has very low level of incremental activity, and we see very little seasonal effect, unlike many other categories,” he said. Several new products on tap for 2013 include S’mores Eggo waffles, Special K Red Berries waffles and Egg Drizzlers in blueberry and strawberry flavors. Consumers opting for Kellogg’s frozen vegetable options over meat options helped drive consumption growth of more than 7% in the company’s frozen vegetable category during 2012, Mr. Allen said. He said 16 FOODBUSINESS NEWS ® consumers are not necessarily converts to vegetarian diets, but rather people who continue to view meat as an option. “Our products provide alternatives for consumers without requiring them to give up any of the taste or protein that they love,” he said. Mr. Allen said Kellogg ramped up brand building in the MorningStar Farm brand in May 2012 and experienced a significant response in sales as a result. “Innovation is important in this segment as well,” he explained. “Existing consumers like the choice alternatives, and new consumers can be drawn into the category by innovative new products. For these reasons, variety is important, and we’ve done a very good job of expanding our offerings. The avoidance of meat is an important consumer trend, and we’re well positioned to benefit and even drive the category.” For 2013, the company plans to introduce a Mediterranean Chicken Burger. The final frozen category in which Kellogg competes — natural and organic — grew more than 10% last year, driven by the combination of convenience and increased demand for natural and organic foods. “Our Kashi brand plays very well in this space,” Mr. Allen said. “It’s a brand that consumers know and trust, and we’ve added innovations to our existing pizza and entree businesses. In 2012, we launched Kashi steamed meals, a convenient and easy way to get delicious, natural meals.” Kellogg’s success in frozen is in contrast to many other companies that have lost steam over the past several years. Recent research from Mintel International, Chicago, showed frozen sales have stagnated or declined. In the conference call, Mr. Allen pointed out Kellogg’s growth in fiscal 2012 was not the industry norm. “It’s interesting to note that our nearest competitor … is actually a combination of private label manufacturers, and we grew at almost twice their rate,” he said. “So, we’re in the right segments of the category, and we’re executing well.” FBN Kellogg income rises on cost-savings, Pringles acquisition BATTLE CREEK, MICH. — Income at Kellogg Co. increased 11% during 2012 as the result of improving revenue in North America, more brand investments and cost-saving efforts, including supply-chain initiatives. The Pringles acquisition also is helping growth. For the year ended Dec. 29, the company had income of $961 million, equal to $2.68 per share on the common stock, which compared with income of $866 million, or $2.39 per share, during the previous year. Sales for the year were $14,197 million, up 8% from $13,198 million during the previous year. The U.S. Morning Foods and Kashi segment had an operating profit of $595 million, down 3% from $611 million during the previous year. Sales for the segment were $3,707 million, down 3% from $3,611 million during the previous year. The U.S. Snacks segment had an operating profit of $469 million, up 7% from $437 million during the same period of the previous year. The segment had sales of $3,226 million, up 12% from $2,883 million during the same period of the previous year. The U.S. Specialty Channels segment had an operating profit of $241 million, up 4% from $231 million during the previous year. The segment had sales of $1,121 million, up 11% from $1,008 million during the previous year. For the fourth-quarter ended Dec. 29, the company sustained a loss of $32 million, which compared with a loss of $195 million during the same quarter of the previous year. During the quarter the company had sales of $3,563 million, up 18% from $3,015 million during the same quarter of the previous year. While the quarterly loss narrowed significantly from the previous year, the company said inflation and costs of goods sold contributed to the loss. Improvements in Latin America helped results in the quarter. “Kellogg Co. delivered strong performance in the fourth quarter, continuing the sequential improvement we’ve seen all year,” said John Bryant, president and chief executive officer. “We’ve met our goals for fullyear internal sales, operating profit and earnings-per-share growth, and we made significant investment in future growth. In addition, the Pringles acquisition is an excellent strategic fit and provides significant opportunity in our snacks business across the globe.” FBN February 12, 2013

Table of Contents for the Digital Edition of Food Business News - February 12, 2013

Food Business News - February 12, 2013
China problems may challenge Yum! Brands in 2013
Tyson Foods sees chicken demand rising
Kellogg frozen foods business on the fast track
Table of Contents
Web Contents
Editorial - Starbucks is redefining brand loyalty
General Mills settles Yo-Plus lawsuit
Green Mountain Coffee sees single-serve pack sales rise 21% in first quarter
Soren Schroder named next c.e.o. of Bunge Ltd
New Mexico legislature blocks bioengineering labeling bill
Pork prices may be volatile in 2013
Kraft Foods fills newly-created marketing post
Hershey has big plans in nuts and fruits
American Licorice Co. to expand in Indiana
Unilever to close spreads plant in Atlanta
Greek yogurt may be going to school
Frito-Lay to launch Taco Bell-inspired Doritos
Kellogg income rises on cost-savings, Pringles acquisition
China problems may challenge Yum! Brands in 2013
Juice, baking business come into focus for Starbucks
New product pipelines pump up protein
Washington - 'Smart snack' guidelines get favorable reviews
Market Insight - Per capita calories rise on added fats
Beverage Trends - Oat beverages offer benefits beyond the bowl
Ingredient Innovations - Fiber boosts for whole grain items
Harvard’s approval of 10:1 ratio draws critiques
Correction
Beverage Business News - Nothing to see here
New Food Products
Ingredient Market Trends - Open outcry trading of hard red winter wheat futures to shift to Chicago
Ingredient Markets
Supplier Innovations and News
Classifieds
Marketplace
Ad Index
Food Business in the News

Food Business News - February 12, 2013

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