Special K is thinning

With summer winding down I need to catch up on a few recent stories. One of the most notable comes out of Kellogg's latest financial update. Normally I do not comment on most of these earnings calls and corporate news items, but this one is of particular interest. Not only are cereal sales down (no real news here), but their current flagship line, Special K, has been losing appeal as a weight management brand.

Over the last decade Kellogg has found a winning solution in a highly competitive market with Special K. They took an old, stodgy cereal product and created an entire franchise out of it. In 2006 they expanded the line and today Special K is not only on the labels of at least a dozen cereals, but the line also includes frozen foods, bars, treats, chips, crackers, shakes and drink mixes. Despite the strong branding, it now appears that consumers, still struggling to control their waistlines, are beginning to move on to other solutions and fads.

According to an AP interview, Kellogg CEO John Bryant sees that consumers want more than just calorie counting now - they are looking for cereals with more specific nutritional benefits. He said that "there's a shift in consumer expectations." To counter this they will be developing new products that highlight the nutrition qualities people are looking for. For example, they have been recently focusing on "The Protein Effect", a group of Special K products higher in protein (a trend also recognized by General Mills), and they have introduced hot cereals with trendy grains like quinoa.

It is good to see Kellogg recognize the shifts around them and make adjustments. The question is: Will they be able to rise above the clutter with an emphasis on good nutrition? At least with weight loss they had a cereal category all their own. Now they will have to go up against many other cereal brands fighting the same battle and competing for the same dollars, including some of their own brands like Kashi. We'll be watching.

(Source: newser)

General Mills sharpens focus on cereal

The cereal industry has been struggling as of late, despite some positive signs here and there. The big companies, in particular, have been trying to figure out how to stem the tide among many shifts in consumer habits and preferences.

I typically avoid commenting on all the quarterly financial reporting, etc. coming out of the cereal industry, but last month General Mills announced some plans they have for the future. While most of this is the expected PR stuff, it was interesting to see them doubling down on cereal, despite the diversity of their brand portfolio. They still see cereal as a tremendous opportunity and want to insure that they remain a leader in this industry.

How will they do it? A few key strategies were described:

1. Focus on nutrition qualities such as protein, gluten-free and fiber. They recognize that consumers want healthful cereals and they want to capitalize on that.

2. More flavor. Cereals must taste great, and they will be tweaking their recipes to meet that challenge. For example, more cinnamon taste in Cinnamon Toast Crunch and fruitier Trix.

3. Play off of adult nostalgia. Cereal has an emotional attachment to many people, and to help adults return to their childhood every morning could be a winner.

4. More advertising, especially online.

It is good to see a company like General Mills hone in on their core business. Their strategies seem sound, but the key will be execution. Can a large corporation respond quickly and creatively enough to the trends, and will consumers trust these moves when they are sometimes less than authentic?

We'll be watching.

(Source: Business Week)

Review: Kellogg's Jif

Summer is keeping me extremely busy, and I will be getting to a backlog of stories on some recent developments, but it is time for another review!

One new cereal that has caught people's attention is Jif Peanut Butter cereal from Kellogg. When a cereal takes on a popular co-branding arrangement it quickly cuts through the clutter in the grocery story and stands out. This has been done many times before, and with peanut butter General Mills' Reese's Puffs provides a good example. Jif is a popular brand of peanut butter, and for Kellogg to work this into a cereal is a brilliant marketing move. Peanut butter is a great breakfast and comfort food, so featuring it in cereal not  just as an ingredient (as has been done before) but linked to a strong brand is powerful.

Beyond the obvious marketing, the real question is how does it stack up as an actual breakfast cereal? Let's get our bowls out and find out!

With the cereal built around peanut butter taste is going to be a critical element for its success. And, it doesn't disappoint. Claiming to be "made with Jif Peanut Butter" (although artificial flavors are in the mix too) the flavor is obvious and pleasant. Not over-bearing, but as with Jif Peanut Butter itself enhanced with sugar. This is a joy to eat.

Texture was the biggest surprise. Jif cereal is not the hardened balls found in Cap'n Crunch Peanut Butter Crunch or Reese's Puffs. The little donut pillows are delightfully light and silky. They are smooth, as close as possible to eating peanut butter out of the jar. And, that's even without milk. Of course, add milk to these light pieces and as would be expected they soften even that much more, especially after 5 and 10 minutes. Normally that would be a mark against a cereal, but in this case it actually reinforces the smooth nature of what one would expect with peanut butter.

Although there are other cereals with peanut butter, this is still a novelty that in itself makes for a desirable experience. But, what really makes this fun to eat and connects the eater with all that is wonderful at breakfast is the brand linkage with Jif. The fact that the taste and texture mimic peanut butter is an additional bonus. Kellogg has executed it well.

With this much fun in your breakfast bowl it is understandable that nutrition might not be the cereal's strong point. Despite the claim of "made with whole grain" there is nothing that really stands out here health-wise. While peanut butter is eaten by many because of the belief that it is nutritious, do not be fooled. Peanut butter is only a flavoring here, not the main ingredient by far. Also, the sugar content is quite high (almost 40% of weight), so while this is fun and could be a great snack food, it's not the power breakfast you will want your kids consuming on a regular basis.

In the end this is a great new cereal from Kellogg that should help their struggling sales. Innovative it is!

(Review protocol HERE)