Saturday, August 30, 2014

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)

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