Kellogg Company at a Glance

Uppers

  • Well-known brand and company
  • Flexible working hours and great benefits

Downers

  • Reprimanded by FTC in 2010 for unsubstantiated advertising claims
  • Office politics can be prevalent in some locations

The Bottom Line

  • Kellogg is a widely known brand name for cereal and convenience foods that has a reputation as a top employer, especially in regards to work/life balance.

About Kellogg Company

This Special K is a cereal winner. From the company's home base in Battle Creek, Michigan, Kellogg Company battles with rival General Mills for the #1 spot in the US cereal market. Kellogg, founded in 1906, boasts many familiar cereal brands, including Kellogg's Corn Flakes, Frosted Flakes, Froot Loops, Special K, and Rice Krispies. While the company works to fill the world's cereal bowls, it actually makes more money these days from its snacks and convenience brands such as Kashi, Pringles, Keebler, Cheez-It, and Famous Amos (snacks) and Eggo waffles and Nutri-Grain and Bear Naked cereal bars (convenience). Its products are sold worldwide.

Operations

Kellogg operates through several segments based on product category and geographic location. They include US Snacks (around 25% of sales), US Morning Foods (another 25% of sales), and US Specialty (around 10%). Kellogg rings up nearly 20% of sales in its Europe segment, 12% in other North America (Canada), and around 5% each in Asia and Latin America.

US Snacks includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks. The US Morning Foods segment includes cereal, toaster pastries, health and wellness bars, and beverages. US Specialty primarily represents non-residential food operations, including food service, convenience, vending, Girl Scouts (Kellogg produces Girl Scout Cookies for the Girl Scouts of the USA, who sell them as a fundraiser), and food manufacturing.

Geographic Reach

The food company manufactures its products in over 20 countries and markets them in more than 180. It generates around 65% of its revenue in the US.

The company's manufacturing facilities in the US include four cereal plants and warehouses in Battle Creek, Michigan; Lancaster, Pennsylvania; Memphis, Tennessee; and Omaha, Nebraska. Its other facilities are mostly in Georgia, Kentucky, Michigan, and Ohio.

Outside the US, Kellogg has additional manufacturing locations (some with warehousing facilities) in about 20 countries in Europe, Asia, Africa, and South America. The company has joint ventures in China, Nigeria, and Turkey.

Sales and Marketing

Kellogg's top five customers generate some 35% of Kellogg's total sales and over 45% of US sales.

The company markets its cereal products, in general, under the recognizable Kellogg's name as well as its "healthy" brand, Kashi. Products are sold to supermarkets through a direct sales force model for resale to consumers. Kellogg uses broker and distributor arrangements for certain products in retail stores, restaurants, and other food service establishments. These particular arrangements are leveraged to market its products in less-developed areas or in markets outside its focus.

Financial Performance

Kellogg continued a four-year slide in revenue in fiscal 2016 (ended December).

Revenue fell a further 4% to $13 billion. By comparison, it made not far off $15 billion in 2013. Kellogg's North America Other segment declined due to weakness in Kashi and Morningstar Farms, a poor first half of 2016 pushed US Snacks revenue down, and US Morning Foods' non-core categories fell sharply.

Net income climbed for the first time in a few years, climbing 13% to $694 million. The increase came from the success of Kellogg's "Project K" cost cutting program.

Cash from operating activities was down 4% to $1.6 billion due to $97 million of after-tax costs relating to redeemed debentures.

Strategy

Kellogg is working at cutting costs and expanding revenue as consumers are turning away from its old reliable cereal lines as awareness of the health risks of sugar increases.

Its ongoing "Project K" efficiency and effectiveness program began in 2013 and will continue through to 2018. This program is designed to help the company focus on core products with increased level of value-added innovation.

Kellogg has adopted a zero-based budgeting (ZBB) program, whereby all expenses must be re-justified each period, in its North America business. The process helped slice $100 million in annual savings in North America in 2016. The company plans to expand ZBB program to international market.

On the product side, Kellogg is extending and repositioning several brands. Kellogg reformulated Special K to create Special K Nourish with probiotic qualities. The company believes probiotics have greater appeal than low calories. Other product extensions include Mini-Wheats Harvest Delights, Smorz, and Dory-themed cereal (in line with the Disney Pixar movie "Finding Dory.")

In the cookie aisle Kellogg advertising is bringing back the Keebler Elves to push cookies. The company also is putting attention and muscle behind the Kashi brand. It intends to promote Kashi Go-Lean products, which have been Non-GMO Project Verified, and Kashi Heart-to-Heart products, which have been fashioned to meet the USDA's organic standard.

In 2016 Kellogg was ready to open a cereal restaurant in Times Square in New York City to showcase its traditional offerings as well as more adventurous concoctions developed by chefs.

Mergers and Acquisitions

In 2016 Kellogg acquired Ritmo Investments, a Brazilian food group that owns the Parati, Zoo Cartoon, Hot Cracker, and Padua brands. The acquisition strengthens its snacking and emerging market businesses.

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Kellogg Company

1 Kellogg Sq
Battle Creek, MI 49017-3534
Phone: 1 (269) 961-2000
Fax: 1 (269) 961-6646

Stats

  • Employer Type: Public
  • Stock Symbol: K
  • Stock Exchange: NYSE
  • CEO and Director: Steven A. Cahillane
  • CEO and Director: Steven A. Cahillane
  • SVP and CFO: Fareed A. Khan
  • 2016 Employees: 37,369

Major Office Locations

  • Battle Creek, MI

Other Locations

  • Palmer, AK
  • Birmingham, AL
  • Montgomery, AL
  • Rogers, AR
  • Phoenix, AZ
  • Buena Park, CA
  • La Palma, CA
  • Roseville, CA
  • San Jose, CA
  • Stockton, CA
  • Walnut Creek, CA
  • Denver, CO
  • Englewood, CO
  • Newington, CT
  • Orlando, FL
  • Tallahassee, FL
  • Tampa, FL
  • West Palm Beach, FL
  • Acworth, GA
  • Atlanta, GA
  • Augusta, GA
  • Columbus, GA
  • Cornelia, GA
  • Rome, GA
  • Des Moines, IA
  • Aurora, IL
  • Chicago, IL
  • Elmhurst, IL
  • Mattoon, IL
  • Oak Brook, IL
  • Evansville, IN
  • Seelyville, IN
  • Kansas City, KS
  • Florence, KY
  • Kimper, KY
  • Louisville, KY
  • Versailles, KY
  • Denham Springs, LA
  • Gonzales, LA
  • Ponchatoula, LA
  • Saint Rose, LA
  • Canton, MA
  • Franklin, MA
  • Finksburg, MD
  • Hagerstown, MD
  • Auburn, ME
  • Cheboygan, MI
  • Davison, MI
  • Grand Rapids, MI
  • Mulliken, MI
  • New Hudson, MI
  • Minneapolis, MN
  • Saint Paul, MN
  • Earth City, MO
  • Kansas City, MO
  • Springfield, MO
  • Charlotte, NC
  • Huntersville, NC
  • Monroe, NC
  • Sanford, NC
  • Youngsville, NC
  • Fargo, ND
  • Omaha, NE
  • Cranbury, NJ
  • Hammonton, NJ
  • River Edge, NJ
  • Hauppauge, NY
  • North Syracuse, NY
  • Oakfield, NY
  • Orangeburg, NY
  • Cincinnati, OH
  • Columbus, OH
  • Delaware, OH
  • Loveland, OH
  • Warren, OH
  • West Jefferson, OH
  • Zanesville, OH
  • Oklahoma City, OK
  • Clackamas, OR
  • Portland, OR
  • Horsham, PA
  • Lancaster, PA
  • Langhorne, PA
  • Mechanicsburg, PA
  • Muncy, PA
  • Cayce, SC
  • Antioch, TN
  • Cleveland, TN
  • Jackson, TN
  • Memphis, TN
  • Rossville, TN
  • Bulverde, TX
  • Fort Worth, TX
  • Houston, TX
  • Schertz, TX
  • Spring, TX
  • Salt Lake City, UT
  • Chesapeake, VA
  • Kent, WA
  • Sumner, WA
  • Menomonee Falls, WI
  • Sao Paulo, Brazil
  • Anjou, Canada
  • Belleville, Canada
  • Calgary, Canada
  • Kowloon Bay, Hong Kong
  • Kolkata, India
  • Mumbai, India
  • Navi Mumbai, India
  • New Delhi, India
  • Osaka, Japan
  • Takasaki, Japan
  • Taipei City, Taiwan
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