Kellogg cereal ‘building momentum’ with adult varieties, but still down in Q3

04-Nov-2015 - Last updated on 04-Nov-2015 at 12:47 GMT

The sales numbers are down, but Kellogg's hopes seem high on the back of Kashi and other "adult cereals".

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Although Kellogg’s CEO was positive during the company’s Q3 2015 earnings call, cereal sales and net sales were both down.

Kellogg’s Q3 net sales were down 8.5% to $3.3bn, which the company blamed on the continued effect of currency translation. In North America, net sales were down 2.7% to $2.3bn, with the US Morning Foods segment down 2.6% to just under $2.3bn. Snacks were also down, falling from $2.52bn last year to $2.48bn this year.

Positivity despite the fall

Despite sales being down, the company was positive about its cereal offerings, noting that Kellogg-branded cereals gained in share over the last three months.

John Bryant, Kellogg Company's chairman and CEO, said they saw improving trends in the US cereal business over the third quarter.

He said the company’s six core cereals grew in gained share and combination, with Raisin Bran seeing double digit growth “due to great advertising and the popular cranberry innovation."

“We saw sequential improvement in our US Snacks business,” he said. “The Kashi brand continued to improve as we expected. Our International business continued to perform well. And importantly, our productivity programs continue to generate significant savings.

“We recognize that we have a lot to do, but we have a plan. We know we can achieve our targets. Our employees around the world are doing great work. And, as always, I'd like to end by thanking them all.”

The company expects it will achieve its long-term, currency-neutral comparable net sales of between 1% and 3% in 2016. It also believes it will reach its long-term target for operating profit growth between 4% and 6%.

Rise of the ‘adult cereal’

Bryant said the company has seen consumption of breakfast at home growing, particularly with “adult cereals” such as Special K and Kashi that were previously suffering.

“You're seeing Special K return to growth behind movement and positioning,” he said. “It got caught in a little bit more of a diet positioning towards a wellness positioning now, with new foods coming out that support that.

“Kashi: between the team in California ramping up the innovations, staying on trend with foods that are evolving and emerging in the marketplace, and you're seeing how the innovation is starting to drive that business back to a better place.”

Bryant said it’s difficult to define what an adult brand is versus one that appeals to kids: but affirmed that adult-targeted products such as these, and even Raisin Bran, are starting to “come back.”