US cereal giant Kellogg said today (29 October) that it expects its performance in the US cereal category to remain strong for the remainder of the year and into fiscal 2010.

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Speaking during a conference call with analysts, Kellogg president and CEO David Mackay (pictured) said that the company was “pleased” with the performance of its US cereals business, which saw shipments increase by 2% and consumer takehome rise by 2.5% in the period.


However, Mackay emphasised, sales were hit by SKU rationalisation and the group’s top eight US cereal brands saw sales growth of 8%.


“We’re working very closely with our retail partners trying to streamline and simplify the category, Straws and Go Packs simply didn’t work and we are effectively taking those out retroactively. That’s about half a share point for us,” he said.


While Mackay said there could be a “little bit more rationalisation” in the number and the scope of SKUs, he added that this was not expected to have a matterial impact on Kellogg’s sales in the remainder of the year.

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Although Mackay said that the category was “doing very well” he did suggest that overall category growth had slowed from last year.


 “Last year in Q3 the category grew 5-6% and this year it grew 2-3%… As we start lapping some of the pricing impact I think 2-3% is probably more consistent with our expectations for the future,” he revealed.


The maker of Kellogg’s Special K and Cornflakes acknowledged that competitive activity in US cereals increased during the quarter, as PepsiCo’s Quaker was able to recover from some disruption to production seen in the third quarter of last year.


However, going forward Mackay said that he did not believe competition in the category would intensify further.


“It is always a fairly competitive category but we don’t anticipate anything that dramatically different as we look to the future.”

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