Developed Markets – Cereal
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Kellogg Company November 13, 2018 Developed Markets – Cereal Doug VanDeVelde, Senior Vice President, Global Breakfast Categories November 13, 2018 Developed Markets Cereal % of Company Net Sales, 2017 Pro Forma* Total Kellogg Kellogg Developed Markets Cereal * Adjusted to include a full year of Multipro, which was not consolidated into Kellogg results until May, 2018. November 13, 2018 2 1 of 11 Kellogg Company November 13, 2018 Stabilizing Developed Markets Cereal • An Important business • Big, expandable brands • Already stabilizing core international markets • Signs of progress in the U.S. • Investing now for stability over time November 13, 2018 3 An Enduring Category • Enduring Attributes – taste, nutrition, convenience, affordability • Versatile food – mixable, portable, meal & snack • High household penetration – multiple boxes in the pantry • Important for retailers – on shopping list, drives basket size • Responds to brand building – innovation, A&P, low private-label share November 13, 2018 4 2 of 11 Kellogg Company November 13, 2018 Shifts With Food Beliefs – Stable Over Time RTE Cereal Category, U.S., Retail Sales Growth +0.2% Fiber, CAGR Low-Calorie, 1997-2017 Low-Fat 1997 2017 Low-Carb Protein Diets Source: Nielsen November 13, 2018 5 Cereal – Growth Through Occasions Win Through Occasions Core is Breakfast Growth from Cereal as Snack At Home Away from Home Snacking • Cereal #1 food eaten * • Growing occasion • Big and growing occasions • Cereal only 15% of • Cereal underdeveloped • Cereal has low share, growing +DD * the total occasion • Benefits of cereal more advantaged Grow share of Launch food and pack Launch food and pack occasion innovation innovation Amplify Health & Expand into new Communicate relevance of Wellness Channels brands for the occasions * Aggregate of U.S., U.K., Canada, and Australia. November 13, 2018 6 3 of 11 Kellogg Company November 13, 2018 Developed-Market Cereal Playbook Strong Brands • Advantaged portfolio • Strong commercial ideas/execution • Agile approach to media Leading Innovation • Renovate the Core • Innovate into new on-trend spaces Win-Win Customer Partnerships • Thought leadership on category growth • Execution of Perfect Store November 13, 2018 7 Already Stabilizing Australia Cereal Strong Brands Australia Cereal Growth Kellogg Net Sales, Currency-Neutral Winning Customer Partnerships Implemented Playbook Leading Innovation 2015 2016 2017 YTD 2018 November 13, 2018 8 4 of 11 Kellogg Company November 13, 2018 Already Stabilizing U.K. Cereal Strong Brands UK Cereal Growth Kellogg Net Sales, Currency-Neutral Leading Innovation Implemented Playbook Winning Customer Partnerships 2015 2016 2017 YTD 2018 November 13, 2018 9 Strong Brands – Deliver Across Segments November 13, 2018 10 5 of 11 Kellogg Company November 13, 2018 Strong Brands – Stabilizing Special K Stabilizing Special K Cereal Value Share Change vs YAG Full Year 2017 YTD 2018 US Canada UK Australia Source: Nielsen, through 9/29/18 November 13, 2018 11 Strong Brands – Reinventing our Natural Brands Key Natural Brands Share Change vs. YAG Full Year 2017 YTD 2018 Kashi/Bear Naked Kashi (Canada) WK Kellogg (UK) Be Natural (US) (Australia) Source: Nielsen, through 9/29/18 November 13, 2018 12 6 of 11 Kellogg Company November 13, 2018 Strong Brands – Amplify Health & Wellness Clean Label Drive More Tangible Benefits Eliminate Artificials: Stronger Wellness Claims: Digestive Wellness: Reduce Sugar: November 13, 2018 13 U.S. is Lagging, But on its Way Toward Stabilization Kellogg's “Core 4” Cereal Markets Share Change vs. YAG Full Year 2017 YTD 2018 US UK Canada Australia Source: Nielsen, Redslim, through 9/29/18 November 13, 2018 14 7 of 11 Kellogg Company November 13, 2018 Advantaged Portfolio – Growing Core 6 + Kashi US Cereal - "Core 6" plus Kashi Change in Share Vs. Year Ago Source: Nielsen, through 9/29/18 Full Year 2017 YTD 2018 Total Core 6 Kashi Core 6 Special K Frosted Flakes Raisin Bran Mini-Wheats Froot Loops Rice Krispies Kashi November 13, 2018 15 Applying the Playbook in 2019 Strong • Amplify Health & Wellness • Drive taste/fun Brands • Grow out-of-breakfast • Digestive health Leading • Hyper-convenience Innovation • Strength & energy • Next-generation natural Win-Win • Improve aisle shoppability With • Continue to regain distribution Customers November 13, 2018 16 8 of 11 Kellogg Company November 13, 2018 Strong Brands in 2019 Amplify Drive Grow Health & Wellness Taste and Fun Evening Snacking November 13, 2018 17 Leading Innovation in 2019 Digestive Wellness / Microbiome Hyper Convenience Happy Inside: Joyböl: Strength & Energy Next Generation Natural Special K Granola: Fitness: GOLean/next gen Plant Protein: NutriGrain Protein Squeezer: Kashi Kids (US): November 13, 2018 18 9 of 11 Kellogg Company November 13, 2018 Improving Aisle Shoppability in 2019 – U.S. November 13, 2018 19 Improving Aisle Shoppability in 2019 – U.S. November 13, 2018 20 10 of 11 Kellogg Company November 13, 2018 2019 – Investing Behind Deploy For Growth • Continued core renovation • Differentiated innovation, including new brands • Increased communication around wellness attributes • Investment in simplifying shelf and shopping experience November 13, 2018 21 In Summary • An Important business • Big, expandable brands • Already stabilizing core international markets • Signs of progress in the U.S. • Investing now for stability over time November 13, 2018 22 11 of 11.