BOCA RATON, FLA. — Wellness, and The Kellogg Co.’s ability to lean into the trend, particularly within the cereal category, served as a focal point during the company’s presentation at the Consumer Analyst Group of New York conference in Boca Raton on Feb. 18.
Paul Norman, chief growth officer, spoke at length about the company’s cereal business, which represents about 25% of Kellogg’s total sales. His opening remarks touched on the breakfast eating occasion and how it is changing, but it was when his presentation shifted to wellness that analysts were able to get a peak under the hood at some of the changes in store for the Battle Creek, Mich.-based company.
The company remains resolute in its efforts to reinvent just about every aspect of Special K’s proposition to the consumer, starting with positioning.
“We are on the journey from diet to wellness, from an absence of negatives less calories to more bang for the calories I consume,” Mr. Norman said. “We have work going on with our foods around the world to renovate and innovate the brand to be more salient with the needs of our consumers moving forward.”
Kellogg recently launched a new gluten-free variety of Special K in the United States, and in the second quarter of fiscal 2015 the company plans to renovate its Special K Red Berries variety to include more fruit. Mr. Norman said the biggest driver of purchasing intent that Kellogg can go after on Red Berries is to “sell more of the food,” and it intends to do just that.
“You think about Special K in the U.S. over the last 5 to 10 years, we have spent $7 out of $10 we spend on the brand selling diet plans, losing 6 lbs in two weeks, challenging you to lose weight,” he explained. “From now on those dollars, and $8 out of $10 of those dollars, will go against selling the food, selling the taste of our food, selling what is in our food and selling why our food is good. So a big focus back on investing in the food, selling the food.”
Kellogg also is in the middle of a lot of change with its Kashi brand. The company is set to reopen Kashi’s offices just outside of La Jolla, Calif., with a team of employees that Mr. Norman said are “passionate about the brand, who believe in the brand first and our food first.”
In the second quarter of fiscal 2015, Go Lean, one of the biggest drags on Kashi’s performance over the past year, will be fully converted to non-G.M.O. certified food, Mr. Norman said. Once converted, Mr. Norman said the company will be able to engage and communicate with its holistic health seeking core target because its food will be clean and ready to go.
Additionally, Kashi is in the process of expanding organic so that 50% of its portfolio will be totally organic by the end of the year. Mr. Norman said the company is on track to achieve the goal through “pioneering innovation,” including the launch of Kashi’s Organic Promise sprouted grains cereal. He said the new cereal currently is in targeted distribution but where it is, “it is doing extremely well.”
Another new product, Kellogg’s Origins, is set to launch in the middle of 2015 and will lean into what consumers are expecting from a food point of view and food culture point of view, Mr. Norman said. He described the product as “a range of cereals, mueslis, granolas,” with no preservatives, no artificial colors or flavors and packed with whole grains and fiber.
“Real food prepared simply,” he said in describing Origins cereal.
“We believe this is exactly where the category needs to lean into and for a mainstream big brand like Kellogg — we can do this with Kashi and Bear Naked and will, and those teams will do that,” he said. “For a mainstream brand like Kellogg, the opportunity is there for us to lean into this space in targeted ways to really reenergize and drive saliency for the category as a choice in today’s world.”
Mr. Norman concluded, “In summary, yes, we need to fix Special K and Kashi, and we need to lean into wellness as a company and as a category to stay ahead of consumers’ changing habits and relationship with food. We can do that because we are well-positioned to do that because we offer basically great taste, convenience and nutrition. We just need to stay ahead of the game in terms of what we offer to them. Yes, gluten-free. Yes, more protein but yes also simpler ingredient lists, things I can understand as we go forward.”
