Healthy snacks image lifts Kellogg

Related tags North america Kellogg Cereal United states

Good foresight on rising health trends and heavy investment in
premium brands have helped cereal and snack producer Kellogg to a
steady sales and earnings rise for 2004, with North America leading
the way, reports Chris Mercer.

Kellogg's net earnings were up by 13 per cent to more than $890 million, with diluted earnings per share up 11 per cent to $2.14 - more than the company's improved forecast announced last autumn, despite a drop in earnings for the fourth quarter.

The results were particularly promising for Kellogg's international division, including Europe and the emerging markets of Latin America and Asia Pacific, where solid performances across the board meant sales increased twice as fast as in North America. Mexicans' rising consumption of snacks and cereals helped Latin America to report the strongest growth.

But North America remains the Kellogg heartland, providing around two thirds of its $9.6 billion in sales. The company has kept on top by investing in wholesome snacks, such as its Pop-Tarts brand and also new fruit snacks, to embrace the growing popularity and importance of whole grain and added fibre products among both consumers and the US government.

Despite common criticism over the amount of sugar in Kellogg's childrens' cereals, the company has gone out of its way in 2004 to promote itself as a healthy choice, publishing policies on sugar reduction, whole grains and fibre on its website. Many food companies in the US are fighting to present themselves as a responsible choice for health-conscious consumers and Kellogg's has held its own well.

The firm has also spent 2004 improving on the image and consumer recognition of its brands, such as Eggo and Nutri-Grain, something which it believes is key to achieving sustainable, long-term growth. The company said this would continue in 2005 and the costs of doing so should be offset by "cost-saving initiatives"​ elsewhere.

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