EUROPE: Kellogg outlines plans to boost Europe performance
Kellogg said its overall rate of innovation will increase “significantly” in 2013
US cereal giant Kellogg has unveiled a set of initiatives for the second half of the year it hopes will boost performance in Europe.
Kellogg saw its sales in Europe fall almost 4% in 2012 and its underlying results in the region have been under pressure this year.
In the first quarter, sales jumped 28.7%, and were up 17.9% in the second quarter. However, the acquisition of Pringles boosted the results. Internal sales, which exclude acquisitions and foreign currency fluctuations, were down 0.3% in the second quarter, which Kellogg blamed on the difficult operating environment.
In November last year, Kellogg outlined a three-pronged strategy to boost its performance in Europe, including "sustainably" growing cereal "in and beyond the bowl", "explosively" expanding snacks and accelerating growth in select emerging markets.
Speaking on the firm's earnings call yesterday, Paul Norman, president of Kellogg International, suggested the firm was making progress on these initiatives but added its overall rate of innovation will increase "significantly" in 2013, adding it has "good visibility to 2014 and beyond".
Norman outlined a number of key initiatives for the second half for both its cereal and snacks divisions.
In cereal, Norman said Kellogg will be looking to drive momentum behind adult brands. This will involve new advertising for Crunchy Nut Corn Flakes in the UK and innovation in the form of a chocolate curls variety of its recently launched Glorious Oat Granola.
In France and Italy, its Extra brand will benefit from a new advertising campaign backed by "significant" year-on-year increases in investment, Norman said. In the UK, Spain and the Nordic region, Kellogg will also launch its 'five-day challenge' campaign on All-Bran.
Kellogg's largest brand, Special K, will also benefit from further investment with a roll out of its whole grain and fibre variants to more countries. The group will also be expanding its presence in hot cereals with the launch of Special K Multi-Grain porridge to selected countries in September.
"We feel confident we will attract new users to the Special K brand over the coming months," Norman told analysts. "As 2014 comes, we will be expanding further into additional formats in various parts of the region with the Special K brand. More to come on this soon."
Norman said Kellogg is also aiming to "compete more broadly in breakfast beyond the bowl". As a result, the group is launching a full range of Nutri-Grain handheld breakfast solutions on the continent. The range will include breakfast biscuits in addition to new to market propositions, including toastable pastries.
In its snacks division, Norman pointed to the performance of Pringles, where he said "things continue to go well". He cited the launch of more variants and geographic expansion in emerging markets.
"We're adding capacity in 2014 to further fuel the brand in terms of growth in existing geographies and in new ones and to enable a strong pipeline of innovation that you will hear more about in the coming months," he told analysts.
"We continue to transform our company in Europe into a cereal and a snacking company, leveraging ideas with scale across the region by operating differently."
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