INSIGHT: Own-label growth slowing - Kellogg CEO
Kellogg CEO Dave Mackay today (30 July) claimed that private-label sales are starting to "moderate" despite consumers still looking for value during the downturn.
Speaking to analysts after Kellogg reported its second-quarter results, Mackay (pictured) hinted that own-label sales are starting to slow after the recent spike in demand for private-label lines.
"We're starting to see private-label growth moderate. While [private label] did have a very strong spurt of share growth, it's now levelling off a little bit," Mackay said.
He added, however, that value remains vital to consumers, with unemployment still rising. "Consumers are still looking for value from every dollar they spend," Mackay added.
In April, when the company published its first-quarter numbers, the Kellogg boss said its US cereals business was coming under pressure.
In the second quarter of 2009, Kellogg saw the growth in underlying net sales from its North American cereals business slow compared to the first three months of the year. However, Mackay said Kellogg had grown its share of the category by "more than one point" during the second quarter.
Kellogg's sales in Europe were down, although Mackay was quick to point out that its UK business was performing better than its operations in certain markets on the Continent. A move away from bulk snacks to branded lines had hit volumes in Russia, he said.
"The Continent is clearly tougher. Markets like Italy and Spain are really struggling. It's very hard to talk just about Europe without getting into some of the market differences. The UK has been the most solid," Mackay said.
Nonetheless, Mackay insisted Kellogg's European businesses should see some improvement during the next six months - if only because the operations will be up against the second half of 2008, when markets on the Continent were hit by the downturn.
"The comps get easier in the back half because we are now lapping the slowdown. We feel good about the performance in the back half," he said.
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