kellogg's ancient legends

Kellogg’s hopes NPD will revive flagging cereal sales

Kellogg’s cereal sales in the UK have gone soggy as the Corn Flakes, Frosties and Special K maker battled falling prices, discounter copycats and the growing popularity of breakfast-on-the-go.

Turnover at the sales and marketing arm of Kellogg’s fell almost £10m to £795.2m in the year to 2 January 2016, accounts revealed. Pre-tax profits also fell from £15m to £13m as a result.

Significant growth for its Pringles brand, mainly driven by the launch of a Tortilla range, was not enough to offset the challenges in cereals. Like-for-like sales at the snacks division, which includes Pringles, did well, the accounts said.

Kellogg’s Special K, Corn Flakes, Frosties and Rice Krispies brands suffered heavy declines in 2015 [Nielsen 52 w/e 2 January 2016] as consumers either skipped breakfast or turned to protein bars and shakes to replace sugary products.

Krave, Variety and Crunchy Nut Granola, along with licences for Disney’s Frozen and Star Wars, proved the exceptions, putting in good performances last year.

“The cereal category continues to be challenging but we have seen strong growth in some of our brands, and launches of our new foods, such as Ancient Legends, have been a success,” said a Kellogg’s spokesman.

“We have a clear strategy in place for next year which will see us focusing even more on great commercial initiatives that will engage and delight consumers and shoppers in the cereal category.”

Revenues also fell at the Kellogg Company of Great Britain, the manufacturing subsidiary, from £150.2m to £134.7m.

Since the start of 2016, the supermarkets have used cereals as a front in the ongoing price war, with prices at Kellogg’s, excluding the Ancient Legends NPD, falling 15p per kilo to £6.27 [BrandView 52 w/e 21 April 2016].

Kellogg’s has also increased its promotions by far more than any other brand, with 162 featured space promotions, a 58.5% month-on-month increase, and a heavy reliance on half-price discounts [Assosia 4 w/e 14 February 2016].