Kellogg has a plan to get adults to eat more cereal: pile on the nutrients.
The Battle Creek, Mich.-based company says it’s introducing Raisin Bran with omega-3 and a multigrain version of Special K later this month as it works to boost struggling cereal sales in North America.
Such offerings are intended to appeal specifically to higher-income people and baby boomers, CEO John Bryant said in a conference call with analysts.
Overall cereal sales have lagged in the U.S. for years as Americans increasingly reach for foods that are easier to eat on the go. But Bryant noted that the category is very fragmented and that particular groups are dragging down results.
For example, he said that kids and lower-income adults are still spooning up plenty of cereal. It’s the higher-income adults who are cutting back.
“I don’t think they’re really that price sensitive. The real issue there is innovation,” Bryant said, noting that products need to more nutrition-oriented.
Notably, Bryant said Special K has helped cereal sales among adults. The brand has been a strong performer with Kellogg rolling out a variety of product extensions including bars, shakes, crackers, chips and flatbread breakfast sandwiches.
General Mills Inc., which also makes cereals including Cheerios and Lucky Charms, is introducing a similar product called “BFast” that promises the nutrition of a bowl of cereal and milk.
In order to diversify its stable of models, Kellogg last year also obtained Pringles chips, which gets two-thirds regarding its revenue from overseas. The offer was intended to give Kellogg a big presence in the salty desserts market and expand its overseas reach.
For the first 1 fourth, Kellogg said strong sales progress for Pop-Tarts helped lift internal sales growth for that U. S. Morning Foods division, which includes cereal, by 1. 6 percentage.
Internal sales strip out your impact of acquisitions and trade rates.
The U. S. Goodies division, which includes Keebler biscuits and Cheez-It crackers, saw interior sales decline by 1. 7 percentage. Kellogg said it has new products planned for the latter area of the year.
Internationally, internal sales within Europe rose by 2. 6 percentage. Latin American sales rose 7. 4 percent and sales in the Asia Pacific region edged upwards 0. 3 percent.
For your quarter, Kellogg earned $311 million, or 85 cents per discuss. That’s down from $351 million, or 98 cents per discuss, a year earlier.
Excluding the prices related to its acquisition of Pringles as well as the Venezuelan currency devaluation, earnings had been $1. 02 per share, within line Wall Street expectations.
The company noted that its results had been hurt by higher costs intended for ingredients. Those higher costs for that year fell mostly in the primary quarter, Kellogg said, and should ease in the second half of the season.
Total revenue for the period rose 12 percent to $3. ninety billion, boosted by the Pringles exchange. That was shy of your $3. 94 billion that analysts predicted, according to FactSet.
Stocks of Kellogg fell $1. nineteen, or 1. 8 percent, to help close at $63. 42 Thursday.
The company stood by it’s full-year earnings forecast of $3. 82 to help $3. 91 per share, taking out Pringles acquisition-related costs. Revenue remains to be anticipated to climb about 7 percentage, implying revenue of $15. 3 billion.
Analysts expect earnings regarding $3. 87 per share in revenue of $15. 26 thousand.
Kellogg also announced a $1 thousand stock buyback program.