BOSTON — The decision by Kellogg Co. to exit its direct-store delivery model a few years ago and shift its strategy to investing in retailer margin and brand building has worked, Steven A. Cahillane, chairman, president and chief executive officer, told participants during a Sept. 4 presentation at the Barclays Global Consumer Staples Conference in Boston.
“Today, we have a snacking portfolio that is very much revitalized,” he said.
Following the divestiture of its Keebler cookie business earlier this year, Mr. Cahillane said five of Kellogg’s power brands — Cheez-It, Rice Krispies Treats, Pop-Tarts, RXBAR and Pringles — now account for 75% of the company’s sales. He said Kellogg is making aggressive investments in brand building to position the brands for further growth.
“(Cheez-It is) nearly a $1 billion brand, and it’s driving our share growth in the U.S. crackers category,” Mr. Cahillane said. “We’ve moved to an entirely new level of brand building with Cheez-It, and we’ve innovated around the brand. Our Cheez-It Snap’d filled up our factory capacity almost immediately, and it’s been a terrific innovation for us and is sourcing from a completely different category than the core Cheez-It.”
After a strong 2018, Rice Krispies Treats recorded double-digit sales gains in 2019, benefiting from a strategic shift Kellogg made in brand building and brand messaging, Mr. Cahillane said. He said the brand has pushed “a little bit outside its comfort zone” and is garnering new consumers in the confectionery category thanks to its new Rice Krispies Treats Poppers platform. The brand also is expanding its channel availability with the launch of new big-size bars for on-the-go eating occasions.
“Rice Krispies Treats, I would also tell you, like many of our other brands, is a U.S.-centric brand, but we know there’s opportunities to continue to grow this brand, not only in the U.S. but also to expand it outside, and we’re doing that now in markets like the United Kingdom and Australia,” he said.
A third power brand, Pop-Tarts, also has been a “great story of revitalization,” Mr. Cahillane said.
“The brand actually declined in 2017,” he explained. “We stabilized it in 2018, and we’re growing double digits in the first half of 2019. And that’s based on getting back to the basics in terms of brand building, following it up with food news.”
He said Pop-Tarts Bites, which is a new platform focused on the on-the-go occasion, is performing extremely well.
Kellogg has had its difficulties with RXBAR since acquiring the brand in late 2017, including a recall in the first quarter of 2019, but Mr. Cahillane said the company is now through that and is back to its earlier distribution levels. Now, Kellogg is striving to prove that RXBAR can go beyond bars and perform as a platform.
“We’re doing the same type of test and learn that made this brand so successful at the beginning, with launches of nut butter online and now oats, which is coming to market as well,” he said. “And we’ve already sold all of our capacity of RX oats. (It’s) yet another brand with opportunities outside the U.S. And we’re now launched in Canada and the U.K. So we really like what RX has done to the portfolio. We like RX as a platform, and we’re very bullish about the future of RX.”
Improved brand building also has been key to driving growth for Pringles. Mr. Cahillane said Kellogg created a social media buzz around the brand by encouraging consumers to stack three Pringles crisps on top of each other to form a new flavor. Like many of Kellogg’s other four power brands, Pringles has experienced strong global growth as well.