Traverse City Record-Eagle

Business

May 2, 2014

Kellogg expects sales to keep falling

NEW YORK — Kellogg’s cereal sales are falling, and the company expects the trend to persist even as it launches a major ad campaign touting the nutritional benefits of cereal.

The maker of Frosted Flakes, Special K and Mini-Wheats said Thursday that sales for its U.S. breakfast division fell 5.5 percent in the first quarter, as gains in Pop-Tarts were dragged down by continuing declines in cereal.

Cereal sales in the U.S. have been sluggish as Americans increasingly reach for alternatives such as Greek yogurt or breakfast sandwiches from fast-food chains. Even within the cereal aisle, Kellogg is facing more competition from smaller players that position themselves as healthier alternatives.

In a phone interview, Kellogg CEO John Bryant said the company had a variety of strategies to improve cereal sales in the months ahead. The primary tactic will be a marketing campaign that reminds people of how much protein is in a bowl of milk and cereal.

“What we’ve seen over the last few years is a protein-seeking behavior” from shoppers, Bryant said.

In a nod to the growing concerns people have about artificial ingredients, Bryant also said Kellogg will remind people of the “simplicity of the food, that this is food directly from the farm to the table.” He explained that a cornflake is corn that has been rolled and toasted.

Kellogg also plans to push the idea of cereal as a snack, whether it’s a late-night treat or a topping for yogurt. And to go after people looking for convenience, it even rolled out a beverage that’s positioned as a drinkable cereal last year.

Rival General Mills, which makes Cheerios, has rolled out a similar drink.

In addition to the general movement away from cereal, some of Kellogg’s troubles have to do with its brands in particular. Its Kashi line, for instance, has fallen out of favor with the health set because it failed to keep pace with trends, such as offering options without genetically modified ingredients.

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