Kellogg's takes bigger bite out of snacks market

By Karen Willmer

- Last updated on GMT

Related tags: Snacks, Nut, Snack food, Snack foods, Kellogg

Kellogg's is making a bid to become a bigger player in the
global snacks market, with the company saying the segment will
account for 50 per cent of its sales in the future.

Currently the division accounts for 15 per cent of sales, said Jean-Yves Heude, head of snacks at Kellogg's. The company is expanding its snacks business in order to take advantage of the current consumer demand for convenience foods. Heude pointed to Kellogg's operations in the US, where snacks already make up 50 per cent of sales. Breakfast cereals account for the rest. "Our strategy and organisation has been revisited to become a real snacks player, and increase our focus on the convenience channel,"​ he said in a statement. "We are now in a better position to support and help our customers."​ The company's strategy is to simplify its range of snacks, based on consumer needs and the current demand for healthier snacks, he said. The target was revealed a month after the company announced it would use new nutrition standards on snacks and cereals it markets to children. The company is attempting to jump on the bandwagon of consumer demand for healthier snacks, as the government encourages more obesity awareness. "Our strategy is built upon internal growth and expansion,"​ Heude said. "We have a strong innovation pipeline. Kellogg's is clearly in the snacks business now and in the future." ​ The Special-K, Optivita, All-Bran, Nutri-Grain and Crunchy Nut bars are all designed to cater for different consumer needs, something the company said it wishes to focus on during the expansion. The company also said 80 per cent of independent retailers preferred price marked packs, and so it plans to release various products in this way as part of the proposal. "Different snacks from the core range will be offered as price marked packs over the next few months to drive awareness and trial, and to encourage retailers to see for themselves how they can capitalise on the snacking sector,"​ Heude said. However, in November last year, cereal bar companies were criticised by consumer watchdog Which? for creating a healthy image for products that really contain hidden sugars and fat. Kellogg's Fruit and Fibre bar was singled out for containing 10g of fat per serving. "But every one of the cereal bars was so sugary it would get a red light for sugar under the Food Standards Agency's 'traffic light' labelling scheme,"​ Which? said. Leatherhead research shows that last year cereal bars took $2.37bn (€1.88bn) in snack sales in the US, Japan, Australia and Europe's five largest countries, with researchers predicting a 2010 sales total of $3bn (€2.38bn). In May, Kellogg's said snack sales growth in Europe in the first quarter had reached double figures, and overall net sales reached $3bn, which it attributed expanding its health and fruit snack range. However, it said operating margins were down by about a percentage point to 20 per cent as it faced increased operating costs and advertising charges related to the launching of new brands.

Related topics: Kellogg, Markets

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