Kellogg seeking acquisitions in Asia

By Dominique Patton

- Last updated on GMT

Related tags: Kellogg, Breakfast

Kellogg, the world's biggest breakfast cereal maker, is in talks to
buy a Chinese food company as part of its plans to boost sales in
Asia, according to a report.

Hans Shin, president of Kellogg Asia, told Reuters that the company wants to double sales in Asian markets to US$400 million by 2009 or 2010 by acquiring food firms in the region. He told the news agency that Kellogg is negotiating the purchase of an unnamed Chinese firm. The US-headquartered company will also introduce new products designed to appeal to Asian tastes to grow its Asian turnover by 6 to 7 per cent this year, said Shin. The region generated US$200 million in 2005, and has seen sales growth of around 4 per cent in recent years. "This year we will see better numbers, thanks to the aggressive roll-out of products appealing to Asians,"​ Shin told Reuters. Such products could include bar-type cereal that does not need milk - not part of most Asian diets - or hot cereal, as cold breakfasts also go against tradition in the region. While breakfast cereals are not traditionally consumed in China or other Asian markets, both Kellogg and rival Nestle have sought to create consumer appeal using aggressive marketing campaigns that position cereals as a healthy food, especially for children. Yet although Kellogg has around half of Asia's cereal market, the region still only accounts for 2 per cent of the group's overall US$10 billion turnover, and to expand sales the group is looking at acquiring local cereal makers. "To catapult growth to around 20 per cent a year, we are thinking of acquiring local cereal or snack makers. Apart from China, we are also studying buyout targets in South-East Asia,"​ Shin said. Kellogg's Frosties is the leading cereal brand in Thailand, where overall volume sales of breakfast cereals grew by 7 per cent during 2005 to reach 2,100 tonnes. Euromonitor analysts predict that rapid growth in demand for cereals in the relatively undeveloped Thai market will mean it is worth Baht1 million by 2010. Kellogg said it would look at the possibility of building a new plant in China to add to its current plants in South Korea, Japan, Thailand and India.

Related topics: Kellogg, Emerging Markets, Markets

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