Food Business News - March 12, 2013 - 28

our business going forward and
for future growth,” he said.
Pringles’ performance has
been strong in every region of
the world.
“Over the last two years, Pringles has delivered mid-singledigit growth rates in Europe,
in Asia and in North America,
and double-digit growth rates
in Latin America and some key
emerging markets like Russia,”
Mr. Jones said. “In fact, Latin
America has just closed its
third successive year of strong
double-digit growth.”
One of the things that sets
Pringles apart is its global appeal — the brand ranks as one
of the top 10 Facebook brands,
Mr. Jones said.
He said it’s also a brand in
which Kellogg has been able
to scale global innovation and
global programs.
“Our biggest product innovation last year, the renovation of
our core chip, shipped to 85% of
our business around the world
in a matter of only a few weeks
from the first launch,” Mr. Jones
said. “And we were able to do
that with marketing that was
qualified across three regions of
the world, and, as you can see,
executed in multiple languages
all around the globe.”

Foothold in frozen foods
Anchored by strong brands
that are growing in attractive, on-trend categories, Kellogg’s frozen foods business
in the United States is one of
the company’s fastest growing
segments, and forms the third
platform in which the company
expects to build growth off of.

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“Eggo is the second-strongest
brand in the Kellogg portfolio,
second only to the Kellogg main
brand itself,” Mr. Bryant said.
“We can keep growing the Eggo
business. There is a bit of a
trend toward hot breakfast, and
this is our opportunity to take
advantage of that trend. And it’s
driving the growth of Eggo.
“There’s also a trend out there
toward avoiding meat, or going
for meat alternatives. And our
Morningstar Farms business, as

consumption growth of 3.4% in
fiscal 2012, Mr. Allen said.
“These products provide
convenience, and, in the case
of our new Special K flatbread
sandwiches, protein and relatively fewer calories,” he said.
“Our flatbreads have only recently been introduced, but
we’ve seen great retail acceptance, and strong velocity.”
Production innovation remains a key for the category,
and 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. Additionally, the
company plans to introduce a
Mediterranean Chicken Burger.
Mr. Allen pointed to Kashi as
a brand that “plays very well” in
the natural and organic foods
space of the frozen aisle.
“It’s a brand that consumers
know and trust, and we’ve added innovations to our existing

T
There is a bit of a trend
toward
towa hot breakfast, and
this is our opportunity
to take advantage of that
trend. And it’s driv the
driving
r
growth of Eggo.
.
— John Bryant, president and c.e.o.
d
the clear leader in that category,
is well-positioned to take advantage of that growth. And also, we
see a trend toward frozen entrees
— a desire within frozen entrees
for people to have more natural,
better-for-you frozen entrees.”
In a Feb. 5 conference call
with analysts to discuss fiscal
2012 financial results, Michael
Allen, president of U.S. Frozen
Foods at Kellogg, highlighted a
number of factors that contributed to full-year sales growth
of nearly 11% in the company’s
frozen foods business.
In the frozen breakfast category, which includes waffles,
pancakes, breakfast sandwiches and entrees, Kellogg posted

pizza and entree businesses,”
he said. “In 2012, we launched
Kashi steamed meals, a convenient and easy way to get delicious, natural meals.”

Evolving in emerging markets
The fourth and final platform
for future growth at Kellogg is
emerging markets.
Mr. Bryant described this platform at CAGNY as “the defining
event in the food industry.”
“How do we position ourselves as a company to take advantage of the development of
these markets?” he asked.
Emerging markets have been
a boon for Kellogg, with the
company tripling its emerging

market business over the past
decade — it now generates $2
billion in sales. Going forward,
Pringles will play a major role in
moving this platform to greater
heights, but there is “even more
we can do and need to do in
these markets,” Mr. Bryant said.
“What we think about is in
terms of three different groups,”
he said. “One is businesses
we’ve been in for a long period
of time, where we have wonderful infrastructure, very strong
brands, and we can keep growing organically. India, South
Africa, Brazil — growing these
businesses 10%, 20%, 30% a year.
“Now if we find an acquisition that accelerates that
growth, we’ll obviously do it in
these markets, but these markets are not acquisition-dependent. There are other markets
out there where we have done
acquisitions or joint ventures,
such as Russia and Turkey, and
our recently announced joint
venture in China with Wilmar.
“And then there’s other parts of
the emerging markets where the
next few years, you’ll see us take
actions, whether it be Eastern Europe, most of Africa, and parts of
Asia, which is still relatively white
space for The Kellogg Co.”
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,
2012, 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 fiscal 2011. Sales for the
year were $14,197 million, up 8%
from $13,198 million. FBN

ERIC SCHROEDER
eschroeder@sosland.com

March 12, 2013

Food Business News - March 12, 2013

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