- Kellogg said net sales during the most recent quarter rose 5.8% to $3.36 billion, beating a forecast of $3.3 billion. Net income rose to $596 million in the second quarter from $283 million a year earlier.
- The cereal and waffle maker said it is benefiting from its acquisition of protein bar maker RXBAR and a recent investment in Nigeria to expand its reach into west African markets.“We've strengthened our portfolio with acquisitions and expanded emerging markets presence, and we've reinvigorated our biggest brands," Steve Cahillane, Kellogg's CEO, said in a statement. "This is starting to show up in our net sales and our in-market performance, and puts us in a position to raise our full-year guidance."
- Kellogg said it expects net sales during its fiscal year to increase 4% to 5% compared to a previous forecast of growth of 3% to 4%.
Kellogg has not been immune to the challenges facing CPG companies as some consumers turn away from high-sugar products like cereals in favor of healthier, on-the-go options like bars, yogurts and other snacks.
The Michigan company has expanded its reach into a few of these segments, most notably with its $600 million purchase of RXBAR that so far has proven to be a sound investment. Protein snacks are widely perceived as better-for-you, and they are big draws for millennials and others who tend to reach for these items.
During its latest quarter, the company continued to face pressure in trucking expenses, as well as lower prices for some snacks, which contributed to a drop in net sales of 0.4%. A factor responsible for the price decline in snacks was Kellogg's decision last year to end direct-store delivery, and instead redirect resources and efforts to direct-to-consumer marketing to increase support of e-commerce.
Still, Kellogg hasn't abandoned its iconic cereals, which continue to struggle. The maker of Rice Krispies, Apple Jack's and Froot Loops said cereal consumption declines "moderated," as the company "made progress toward stabilizing key health and wellness brands, by emphasizing their wellness attributes."
In the last year, Kellogg has added probiotics to its Special K cereal as part of an effort to position it as a health tool, a change from an earlier focus on weight loss. And in some parts of the world, it announced plans to double the amount of vitamin D in many of its cereals to provide half of the average adult's daily requirement in each serving.
Despite these changes, Kellogg has not completely abandoned the sweetness factor in cereal as it hopes to grab sentimental adults remembering their childhood and consumers turning to the product as a snack. Kellogg launched a trial run of cupcake flavored Unicorn Cereal with pink, purple and blue rings sprinkled with white "crunchlets." It also rolled out Wild Berry Froot Loops, the brand's first new variety in a decade that balances sweet and fruity berry flavors and adds a purple star to the cereal's red, blue and green loops. General Mills and Post also have embraced sugary nostalgia with their cereals.
Kellogg appears to be on the right track toward stabilizing its business. Its cereal operations are focusing on both healthy and indulgence, allowing it to reach a wider swath of consumers, and it's expanding its product reach through bolt-on deals like RXBAR that allow it to better respond to consumer trends. The company will likely continue to use a similar strategy going forward as consumer eating habits continue to shift.