Corporate Profiles - 2020 - 90

COMPANY OVERVIEW

jumped 44% in the second quarter with net
sales up 11% on an organic basis. As reported,
sales were up 1%. Kellogg attributed the surge
in profits to "operating leverage, delayed investment, and a decrease in one-time charges that
more than offset the absence of results from
the divested businesses and incremental costs
related to safety and increased production and
distribution related to the crisis." Excluding special items, operating profit was up 23%.
A wave of brand building investment at Kellogg from 2017 to 2019 was successful. During
this period, the company invested in its Pringles, Cheez-It, Pop-Tarts and Rice Krispies Treats
brands and achieved double-digit growth in
three of the four. Now the company is embarking
on a new wave of investment.
The investment will be more modest than the
first, management has said, and focus on such
cereal brands as Froot Loops, Frosted Flakes,
Frosted Mini-Wheats, and Raisin Bran as well as
RXBAR, Special K and MorningStar Farms.
Expansion of the RXBAR brand was interrupted by a supplier-related recall in 2019.

With distribution rebuilt, management plans to
invest in the brand to accelerate growth. In June,
RX Kids bars were reformulated to feature an
oat base and 10 ingredients or fewer. Then, in
August, RXBAR Layers debuted. RXBAR Layers
layered protein bars are available in chocolate
almond and peanut butter chocolate flavors.
With 14 to 15 grams of protein per bar, RXBAR
Layers combines egg whites, nuts, dates, nut
butter and honey.
In cereal, plans include reintroducing Toucan
Sam to consumers, launching more licensed and
seasonal cereals, and continuing to co-brand
within its portfolio by introducing two new flavors of Eggo cereal. In September, news broke
that Kellogg would be partnering with sweet
baked goods maker McKee Foods Corp. to introduce Little Debbie Oatmeal Creme Pie Cereal.
The cereal, which is expected to hit store shelves
this December for Little Debbie's 60th anniversary, continues a growing trend in the RTE cereal
category of cereal makers partnering with snack
cake companies.
MorningStar Farms is getting a packaging

Kellogg's North America

Kellogg's Europe

Fiscal 2019

Fiscal 2019

% change from year ago
$8,390

Net sales
-3.4%

Segment operating profit

% change from year ago
$2,092

in millions

in millions

Net sales

overhaul to make it "more Instagram-worthy,"
said Christopher Hood, president of Kellogg
North America. He also said the brand is expanding beyond frozen and into the refrigerated
case through the Incogmeato sub-brand. The
ready-to-cook application also has opportunities
to expand in foodservice, school and university
channels.
To accommodate growth of the MorningStar
Farms brand, Kellogg said it will invest $43 million to expand a manufacturing plant in Zanesville, Ohio, that processes products for the company's MorningStar Farms line.
The investment will include $25 million in
upgraded equipment and $18 million in capacity expansion. The project is scheduled to be
completed by the end of 2021 and will add 40
employees at the plant.
During the second quarter of fiscal 2020,
ended June 27, Kellogg management said MorningStar Farms sales rose 31% as stay-at-home
orders due to the pandemic led to a surge in retail sales, but that the business lost market share
because of capacity constraints. CP

$1,215

-1.5%
Segment operating profit

$222

-13.0%

Kellogg's Latin America

Kellogg's Asia, Middle East and Africa

Fiscal 2019

% change from year ago

$85

% change from year ago
$2,156

in millions

Net sales
-0.7%

Segment operating profit

Fiscal 2019

$940

in millions

Net sales

-11.0%

+20.0%
Segment operating profit

-13.0%

90 \ October 2020

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

$195
+12.0%

Corporate Profiles



Corporate Profiles - 2020

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