US cereal giant Kellogg has raised its target for long-term sales growth and insisted that its performance this year will undergo a marked improvement on a “difficult 2010”.
Speaking at the CAGNY investor conference in Florida today (23 February), management reaffirmed Kellogg’s long-term profit and EPS growth guidance of “low single-digit” expansion but raised the company’s long-term internal net sales outlook from the “low single digits” to a target range of 3-4%.
Kellogg president and CEO John Bryant said that the company believes sales will be lifted as its categories – cereals, snacks and frozen – move into an inflationary price environment. However, he emphasised that the improved sales outlook was more a reflection of management’s “confidence in our ability to get the company to grow”.
“It’s a reflection of what our business can do,” he insisted. “We think that 3-4% currency neutral sales growth is realistic: we think we can meet it or beat it.”
Moreover, Bryant insisted that Kellogg would return to stronger growth levels this year after a “difficult” 2010, when the company booked a 1% slide in sales to US$12.4bn.
“In 2011 we are back,” he proclaimed. “Our main focus for 2011 is to gain momentum as a company.”
Kellogg suggested that it would expand in the US cereal category by returning to higher levels of innovation and brand building after a lull in activity last year. Brad Davidson, president of Kellogg North America, revealed that the group was increasing its investment in NPD by 25% during the year. Kellogg will also revamp all of its packaging in the market, beginning with new cereal packaging which is hitting the shelves throughout the first quarter, he added.
“We are very happy with how our packaging has worked out. We think it is romancing our food,” Davidson said.
Meanwhile, international chief Paul Norman affirmed that Kellogg is also looking to drive growth overseas. In developed markets, such as the UK and Australia, Kellogg is working on strengthening its “core” business through investment in innovation and brand building, Norman said.
In emerging markets, Norman said Kellogg is focusing on increasing adult per capita consumption and improving the availability of its brands.