- Cereal producers saw mixed earnings results this week: Kellogg reported Thursday it had increased its market share on the cereal aisle by 0.2% in the most recent quarter, though sales for its U.S. morning foods segment fell 1.2%. Post's Post Consumer Brands segment, which includes cereal, saw a 0.8% uptick in sales on a comparable basis, though volumes fell 1.9%.
- Kellogg's first-quarter revenue dipped 5.5% to $3.4 billion, though on a comparable basis excluding currency impact, sales jumped 6.6%. Quarterly profit came in at $175 million, or $0.49 per share, a decrease from $227 million, or $0.64 per share, last year. Kellogg's CFO Ron Dissinger announced he would retire at the end of the year.
- Post reported on Thursday a 20.7% increase in fiscal second-quarter net sales to $1.27 billion and a $98.6 million increase in adjusted EBITDA to $247.8 million. These increases were driven primarily by sales and synergies realized from Post's acquisitions of MOM Brands and Willamette Egg Farms and moderate organic growth.
Kellogg CEO John Bryant hasn't let the dip in morning foods shake his confidence that cereal is poised for a turnaround. He said on an earnings call that he believed U.S. cereal sales would be positive this year, the first year since 2012.
Bryant bases much of his optimism on innovation and new products. Special K was once a go-to "diet-friendly" cereal, but Kellogg has since shifted the brand. Special K Nourish is meant to be more like muesli. To compete with breakfast sandwiches, Special K Crustless Quiches are single-serve breakfast options with higher protein. The company has also recently released Raisin Bran Granola.
Post has taken a different approach. It hasn't abandoned product innovation, but it looked beyond its existing portfolio and acquired MOM Brands in 2015. That acquisition was a major contributor to Post's revenue and profits this quarter.
Kellogg hasn't been as active in the acquisitions space beyond acquiring international companies like Bisco Misr (majority stake) and Mass Food Group last year.
Beyond cereal, Kellogg reported mid-single-digit growth for its Pop-Tarts brand, which has taken the indulgent treat route with new soda-flavored varieties currently hitting stores. By playing up the product's sweetness and bringing in popular soda flavors like Crush Orange and A&W Root Beer, Kellogg demonstrates that forcing packaged foods to align with consumer health trends isn't manufacturers' only option to reinvigorate lagging sales.
Kellogg also hopes that its Pringles business will boost the company's international sales. Kellogg’s U.S. snacks business, its largest, reported a 2.6% sales decline for the quarter.
Post's Active Nutrition segment, which includes the PowerBar brand, saw a 6.8% increase in net sales (11.6% on a comparable basis), thanks to strong growth for Premier Protein shakes. As consumers continue to pursue protein-based products, this segment could remain strong for Post. That's as long as its brands continue to innovate and stand out from the flood of competing products on the market, particularly from startups.