Kellogg Thriving in Health Market

Acquisition of RXBar and emergence into health-focused markets shows in net sales.

August 07, 2018

BATTLE CREEK, Mich. – Kellogg, the cereal and waffle maker, recently acquired Chicago-born RXBar for $600 million, and it’s paying off. The company’s net sales rose 5.8% to $3.36 billion in Q3, beating a forecast of $3.3 billion. And RXBar contributed $59 million in sales to Kellogg during the second quarter and $110 million in the first six months of the year.

A Chicago Tribune article reported that “Kellogg said RXBar expanded distribution and took a bigger slice of the protein bar market during the spring quarter, and accounted for nearly all the sales growth in a segment of Kellogg goods that includes U.S. frozen foods like Eggo waffles and Morningstar Farms meatless products, Kashi and the company’s Canadian businesses.”

Kellogg hasn’t abandoned its iconic cereals, but staples such as Rice Krispies, Apple Jacks and Froot Loops are struggling as cereal consumption declines. To come back, Kellogg is adding probiotics to Special K cereals and doubling the amount of vitamin D in cereals.

It’s all part of a move that caters toward a consumer trend to prioritize healthy ingredients and more convenient options over high-sugar products. The company also decided to end direct-store delivery and focus efforts on direct-to-consumer marketing and increase the support of e-commerce.

Kellogg plans to expand sales into Europe for the first time this year and is developing a kid’s line of bars and nut butters. Kellogg expects net sales during the fiscal year to increase 4%-5%, compared to a previous forecast growth of 3%-4%.

“We’ve strengthened our portfolio with acquisitions and expanded emerging markets presence, and we’ve reinvigorated our biggest brands,” said Steve Cahillane, Kellogg CEO, in a statement. “This is starting to show up in our net sales and our in-market performance, and puts us in a position to raise our full-year guidance.”

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