Traverse City Record-Eagle

Business

November 5, 2013

Kellogg to cut jobs as cereal sales slide

NEW YORK (AP) — Kellogg is planning to cut its global workforce by 7 percent as the maker of Frosted Flakes, Rice Krispies and Special K struggles to convince Americans to eat more cereal.

The company, which also makes Pop Tarts and Eggo waffles, also said Monday it expects earnings per share for the year to be toward the lower end of its previous projection as a result of weaker-than-expected sales. According to FactSet, Kellogg has 31,000 employees, suggesting the company plans to cut about 2,170 jobs.

“Some employee notifications will take place this week,” the company said in a statement. The company would not confirm the total number of job cuts or specify how many would occur when.

Kellogg says the workforce reductions will take place by the end of 2017, along with plant consolidations and other cost-cutting measures it’s dubbing “Project K.”

Kellogg, based in Battle Creek, Mich., has been struggling to boost cereal sales in its flagship North American market. Although cereal remains a huge business, Americans have a growing number of options in the morning and are increasingly reaching for foods that they can eat on the go.

In the latest quarter, Kellogg said sales in its U.S. Morning Foods segment fell by 2.2 percent. The company has been trying to find new ways to get people to eat cereal, including a breakfast drink positioned as an alternative way to get the nutrients of a bowl of cereal. But it’s still too early to tell whether those efforts will catch on.

To expand into the salty snacks business, Kellogg last year bought Pringles chips. The company is hoping that the chips will also give it a bigger presence overseas as well. But in the latest period, Kellogg said sales in the U.S. Snacks segment also fell by 2.5 percent.

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