Snack like an Egyptian: Kellogg's keen to drive Pringles growth via BiscoMisr buy


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Canopic jars in Cairo Museum (Photo: Charlie Phillips/Flickr)
Canopic jars in Cairo Museum (Photo: Charlie Phillips/Flickr)

Related tags Arabian peninsula

Kellogg’s Europe president Chris Hood says the company is ‘excited’ by the growth potential of new Egyptian biscuit acquisition BiscoMisr, which he says can help drive sales of global brands including Pringles.

Presenting at CAGNY 2015 in New York this morning, Hood characterized Europe (for Kellogg’s the territory also includes Russia and MENA) as a complex operating environment where 1.2bn consumers in 65 countries spoke 200 different languages.

Nonetheless, Kellogg’s strategic focus in the region is clear enough and involves (according to Hood’s slides): ‘winning at breakfast in cereal’, ‘explosively growing snacks’ and ‘accelerating growth in emerging markets’.

Talking about growth in Europe, Hood said: “The next emerging market focus for us in Europe is the Arabian peninsula and Egypt. We think this is a very rich environment to drive growth.”

“These economies are stabilizing, they’ve got large and growing populations. In many of these countries the population is very young – we’ve got 50% of the population less than 24 years old, so the demographics are very much in our favor,”​ he added.

Fast-growing consumption, category premiumization

“There’s very fast-growing consumption – preimumizing of categories, brands in growth, packaging formats in growth. So we’re very excited about the prospects.

“And we’re seeing very strong category growth in the markets where we compete as well. We’ve more than tripled our business in the Arabian Peninsula and Egypt over the last three years, since 2011.”

Presenting a slide showing pro forma results for Egyptian company BiscoMisr, which Kellogg acquired a majority stake in on January 15, Hood said: “Not only have we tripled the business but the trend is accelerating, and we think this is going to be a big growth engine for us in the future.

“We’ve got great brands that can appeal here – Cornflakes, Coco Pops, Special K and Pringles.  The acquisition of BiscoMisr company gives us a fantastic set of local brands in Egypt that we can build around to drive local category penetration of our brands in Egypt and also the backbone to bring some other brands into the country to develop the balance of our business.”

“We’re very excited about this. I was in Egypt three weeks ago…we think this business has a great future. It’s a very well-run company with a great management team, very strong go to market capability – they own some of their own retail outlets but also have advanced service that supplies product up and down the trade.”

And a new Egyptian platform for Pringles...

Although the purchase is relatively modest (BiscoMisr’s annual sales were circa. $70m in 2013), Hood said it excited Kellogg’s because the lent the company a platform to push global brands like Pringles as well as its acquisition’s local biscuit brands, not just within Egypt but within North African generally.

And highlighting snacks as a regional growth engine, Hood said Pringles had been “transformational”​ in paring back cereal’s share of a European snack category worth a massive $2.9bn in 2014.

As the brand approaches $2bn in global revenues, Kellogg’s is investing in capacity for Pringles, and the brand is identical across the 160 countries in which it is sold.

Summarizing, Hood said Kellogg’s feels optimistic about its growth prospects in Europe, and even in Russia where the company is “very excited about our prospects over the long term”.

“Clearly it’s a little bit of an interesting time right now. But we feel the fundamentals still exist in Russia for long-term growth, and we’re very excited about the potential.”

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