- Kellogg is battling a weakening cereal segment and processed foods industry, but CEO John Bryant remains positive and confident the company can improve.
- Kellogg's stock hasn't been able to keep up with competitors, coming in at a 1.3% increase so far this year compared to 7.4% for other packaged food and meat companies' subindex.
- Some investors and analysts are growing wary of Kellogg's future performance, as some believe that cereal sales will remain pressured by other breakfast options, such as Greek yogurt. They may also not have confidence in much of the rest of Kellogg's processed foods portfolio as more consumers turn toward fresher, healthier, and more natural foods.
While U.S. morning foods sales declined 2.3% last quarter, Bryant argued "that an aging population and a growing interest in cereal as a snack or dessert will strengthen iconic brands like Special K, Frosted Flakes, and Froot Loops," The Wall Street Journal reported.
Bryant said on a recent conference call that "while we definitely have more to do to improve [cereal] performance, we’re confident that we’re focusing our investment on the right drivers of sales growth to continue recent trends."
One recent trend for Kellogg is to adapt to consumer health preferences by pushing its better-for-you cereal brand, Kashi, which Kellogg acquired in 2000, though it's been struggling. Kellogg has also introduced several new products in the health space and retooled some recipes to make them more conducive to the consumer health trend, including removing artificial colors and flavors from its cereals and other products.
However, with 2014 bringing in the lowest net profits in over a decade, it's no surprise investors are getting antsy. Project K is a Kellogg cost-cutting initiative, and already the company has closed several plants, but the bottom line savings haven't been revealed in earnings reports.