Milling & Baking News Corporate Profiles - 2019 - 90

COMPANY OVERVIEW

preference for our food," Mr. Cahillane said
during a Sept. 4 presentation at the Barclays
Global Consumer Staples Conference in Boston.
"We think the food is outstanding. I've been in
our test kitchen myself grilling this up. It is a
real meat-like experience. It grills like meat. It
bleeds like meat. It tastes like meat, and we're
very excited. We think we have a right to win in
this space, and ... launching in the first quarter
of 2020, and we have ambitious plans for this."
MorningStar Farms has been involved in the
plant-based foods space for many years and,
according to Kellogg, often has been the first
meat-alternative product people have tried. Now
the company is hoping to build on its name recognition at a time when more and more companies are entering the plant-based foods category.
Also during the Barclays presentation Mr.
Cahillane said Kellogg is testing a product
called Leaf Jerky, which he described as being a 100% plant-based meat jerky. He said
the product arose out of a program at Kellogg
called "Tiger Tank," which is the company's version of the television show "Shark Tank."

Leaf Jerky is soy-based and packaged in a
single portion for portable consumption. Brandishing the tagline "All leaf. No beef," the product is available in one flavor, cracked pepper and
herb, with additional varieties launching soon. A
serving has 80 calories and 11 grams of protein.
Mr. Cahillane has identified ready-to-eat cereal as one of the areas Kellogg has the most
work in front of it.
"It's a highly penetrated category," Mr. Cahillane said. "It's a profitable category for us.
And by no means do we think that this category's best days are behind us. But it's going through a challenging time right now. As
a category, it's only declining by about 1%. So
it's not falling off the cliff as if you read some
reports you might think."
At its core, many of the ups and downs of the
U.S. R.-T.-E. cereal business may be isolated to
the health and wellness segment, he said.
"(We need to remind) people that cereal can
be very important and a great addition to a
healthy diet," he said.
A major challenge at Kellogg over the first

Kellogg's U.S. morning foods
Fiscal 2018

Kellogg's U.S. snacks
Fiscal 2018

% change from year ago

Net sales
-2.4%

Segment operating profit

% change from year ago
$2,957

in millions

$2,643

in millions

Net sales

half of 2019 was the implementation of an entire price-pack architecture redesign.
Mr. Cahillane said the company took dozens
of cube sizes out of its portfolio, an initiative
that simplified Kellogg's manufacturing "quite
substantially."
"It's improved the look that we have in the
grocery stores," he said. "It made us much more
shoppable. It's made us much more merchandisable but has led to a really significant pullback in promotions in the first half of the year,
and it led to a position that we don't like to be
in where we were losing share. And we have
every intention of maintaining our competitiveness as we get into the back half of the year
and even making investments that we believe
will revitalize some of our story brands."
Net income attributable to Kellogg in the
six months ended June 29 totaled $568 million, equal to $1.66 per share on the common
stock, down 46% from $1,040 million, or $3
per share, in the same period a year ago. Net
sales increased to $6,983 million from $6,761
million. CP

$478

-4.9%
Segment operating profit

$446

-16%

Kellogg's U.S. specialty

Kellogg's North America other

Fiscal 2018

% change from year ago

$251

+15%
Segment operating profit

-20%

90 \ November 2019

% change from year ago
$1,853

in millions

Net sales
-0.6%

Segment operating profit

Fiscal 2018

$1,235

in millions

Net sales

+223%

Milling & Baking News * Food Business News * Baking & Snack * Meat+Poultry * Pet Food Processing

$222
-3.1%

Corporate Profiles

Milling & Baking News Corporate Profiles - 2019

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - 2019