The company this week told the Consumer Analyst Group of New York (CAGNY) conference that it under-indexed in single-serve formats, which was a big opportunity for brands such as Pringles and Cheez-It. Kellogg also said its Kashi brand would return to full-year growth in 2016 on the back of renovation work and new product development.
Cheez-It is Kellogg’s biggest brand in North America, with 19 years’ consecutive growth making the brand worth more than $1bn in retail sales. The average CAGR for the brand over 19 years has been about 4%, but Kellogg's North America president Paul Norman said it was possible to further accelerate growth.
“Cheez-It is a cracker brand and lives in the cracker aisle in a box,” he said. “But Cheez-It is not seen as a cracker by consumers, it is seen as a savory snack.
“There is a huge opportunity to accelerate growth if we can get the brand within reach of more people, wherever they shop, wherever they chose to consume.”
He said the company would be investing more in the core Cheez-It brand in 2016, but added: “We need to explode the number of formats the brand is in and the possibilities to buy, so will be expanding into larger formats and, importantly, smaller formats.”
Smaller packs will enable the brand to target new eating occasions and drive incremental growth, he said.
Kellogg has expanded the Kashi Go Lean sub-brand with two new products - Clusters Vanilla Pepita Cereal and Plant Powered Bars.
The company said the products were designed to offer “a combination of nutritious ingredients for those who seek out plant-based foods to fuel their performance without soy or gluten”.
With 9 g of protein and 6 g of fiber per serving The cereal contains ingredients including popped sorghum, rolled red beans, pea crisps, pepitas and vanilla.
The Go Lean Plant Powered Bars are available in four flavors: Salted Dark Chocolate & Nuts; Honey Pecan Baklava; Dark Chocolate Cashew Chia; and Peanut Hemp Crunch. Each bar is a blend of grains, nuts, seeds and pea crisps topped with a nut butter or sunflower seed butter layer. Each bar contains 8 g of protein and 4 g of fiber.
Norman also pointed out that Cheez-It Groozes – launched 18 months ago – had great potential in new formats. “It should be in more bags, and in more places,” he said.
Pringles market share
Similarly, Kellogg believes Pringles could do more.
Although Pringles has enjoyed success in the US, said the company, it has a relatively low market share in some regions compared with its performance in Europe leaving room for brand growth in North America, Latin America and Asia-Pacific.
Norman said Kellogg will invest in the brand in 2016 to ensure it has the core range right. Kellogg now has capacity in the US to produce small Pringles snacking tins, which it said opened up new occasions and retail channels.
Kashi: 'A source of weakness'
With regards to the Kashi brand, Kellogg chairman and CEO John Bryant admitted to the CAGNY audience that it had been “a source of weakness for us for the last couple of years”.
“We have taken steps to fix that and we are seeing progress,” he said, adding that sales of Kashi had improved each quarter in 2015, and that he expected the brand to be in full-year growth in 2016.
The Kashi team has been given a lot of autonomy, said Kellogg, and had spent 15 to 18 months renovating and re-engineering the products so they are non-GMO verified, with half the range organic.
“Our food is now right, and we can lean into consumers and kickstart the growth in Kashi, something we couldn’t do until the food was right,” said Norman. “We will lead plant-based nutrition with the Kashi brand.”
Investment in Kashi will include innovation such as the new Go Lean cereal and bars rolling out to retailers now, said Kellogg (see box out).
The company last week reported a 10.6% drop in overall sales in the last quarter of 2015 to $3.1bn – but said performance of its US cereals business is improving and it expects the division to be in full-year growth in 2016.