Kellogg Company November 13, 2018
Developed Markets – Snacks
Chris Hood, President, North America
November 13, 2018
Developed Markets Snacks – Turning Back to Growth
• Biggest portion of our portfolio
• Big, expandable brands
• DSD exit as critical un-lock
• On-the-Go as growth platform
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Developed Markets Snacks – Biggest Portion of Portfolio
% of Company Net Sales, 2017 Pro Forma*
Total Kellogg Kellogg Developed Markets Snacks
* Adjusted to include a full year of Multipro, which was not consolidated into Kellogg results until May, 2018.
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Snacking Trends Worldwide – Outpacing Packaged Food
Forecast 4-Year CAGR Historic 3-Year CAGR (2019-2022) (2015-2017) 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% 0.0% -0.5% Total DM US Canada UK Germany France Australia Total DM US Canada UK Germany France Australia
Packaged Food Snack Packaged Food Snack
Sources: Growth rates from Euromonitor, Retail Value RSP (Historic constant/Forecast constant 2018 prices) “Developed Markets” (DMs) as defined by US, UK, CAN, AUS, FR, IT, ESP, DE)
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Developed Markets Snacks – Strong Brands
Better Growth for Biggest Brands:
Sustained Investment for First Time in Years:
Our Own Challenger Brands:
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DSD Exit – Unlocking Investment & Growth
Then Now
• Only supported food/mass channel • Improved consumption performance • Consumer migration to multiple channels • Fewer, stronger SKUs Exited DSD in • Insufficient P&L room for mid-2017 • Increased brand investment brand investment for more brands and across all channels • Retailers’ shelf and primary display decisions shifted to • Higher margins for retailer head office and for Kellogg
• Sustained too many SKUs November 13, 2018 6
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Post-DSD – Supported Brands in Growth
Retail Sales, % Growth, U.S.
Q3 +4.9% +0.6% +6.7% +9.3% +5.8% +10.5% +8.0%
YTD +5.0% +0.9% +6.2% +18.6% +2.6% +5.9% +0.2%
Source: Nielsen, xAOC, periods ending 9/29/18
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Stronger Shelf, Restoring Merchandising
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Improving Overall Consumption & Share Performance
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Pringles – Worldwide Growth
Build World-Class Brands
, through 9/29/18
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Sustaining Pringles Momentum – Brand Building
Build World-Class Brands
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Sustaining Pringles Momentum – Pack Formats
Win Through Occasions
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Sustaining Pringles Momentum – Innovation
Flavors Limited-Time Offerings Food Forms
Win Through Occasions
Adapt flavors to “One more can” local markets Penetration through food experiences
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Sustaining Pringles Momentum – In-Store Activation
Deliver Perfect Service & Store
Racks improving shelf Partnerships elevating presence and shoppability display activity
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Wholesome Snacks – Improving Performance
Expand RX
Sustain momentum in Rice Krispies Treats
U.K. U.S.
Investing in protein
Invest behind natural & organic
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On-the-Go – Growth Exceeding Expectations
U.S.
Win Through Occasions
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On-the-Go – Investing in a New Growth Platform
• Expanding and optimizing • Co-packed OTG product line
• Additional • Winning shelf and front-end transportation placements requirements • Investing in in-house • Redeployment & packing capacity, other repacking to meet efficiencies demand • Executing RGM actions
Near-term profit pressure Long-term growth platform with restored margins
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Investing Behind Deploy For Growth
• Created a single Retail Sales Team o Effectiveness and efficiency o More time in stores, less time on the road Deliver Perfect • Implementing cross-category promotions Service & o Bigger, more powerful events Store • Strengthened reach in Specialty Channels o Expanded C-store outlets reached o Built hybrid food service team for greater coverage o Launched B2B eCommerce
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2019 – Investing Behind Deploy For Growth
Differentiated Innovation
Pack Formats for Occasions
Expanded Distribution
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In Summary
• Big, advantaged brands in key snacking categories
• Successful DSD transition unlocked investment dollars, organization changes, and portfolio moves
• U.S. in-market performance on the upswing
• Sustaining Pringles momentum worldwide, while improving wholesome snacks performance
• On-the-Go expansion creates new growth avenue, with opportunity to improve margins
• On track for low single-digit growth over time
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