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3. AGB Vol. II THE MARKET Grain-based products are at the heart of a healthy American diet. The U.S. Department of Agri- culture’s food pyramid recommends six to eleven servings a day of products made from grain. As Americans build grain-based foods into their diets, ready-to-eat cereal plays a most impor- tant role. The average U.S. resident consumes nearly 11 pounds of ready-to-eat cereal each year, providing both the goodness of grain and the added value of vitamin fortification. Kellogg Company, the world’s leading pro- ducer of cereal, manufactures cereal products and a wide range of other convenient, nutritious grain and vegetable-based products, including toaster pastries, cereal bars, frozen waffles, cookies, crackers, and veggie foods. Even as Kellogg’s® great-tasting convenience foods respond to the growing number of con- sumers who eat “on the run,” the company also serves the approximately 70 percent of children and adults who continue to eat breakfast at home. ACHIEVEMENTS Headquartered in Battle Creek, Michigan, Kellogg Company has a record of nearly 100 years of excellence and a reputation for products that pro- vide value and contribute to a healthy diet. With projected annual sales of around $8 bil- Foundation, is one of the world’s leading philan- menu. Wheat was cooked, forced through granola lion, Kellogg Company brands include Kellogg’s, thropic organizations. rollers, then rolled into long sheets of dough. One Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Always committed to environmental stew- day, after cooking the wheat, the two men were Rice Krispies, Murray, Austin, Morningstar Farms, ardship, Kellogg Company is proud of its nearly called away. Although the wheat was rather stale Famous Amos, Carr’s, Plantation, Ready Crust, and century-long record of being one of the world’s when they returned, the brothers decided to see Kashi. Kellogg icons such as Tony the Tiger and largest users of recycled paperboard. In fact, the what would happen when the tempered grain was Snap! Crackle! Pop! are among the most recognized very first cartons that came off the Kellogg pro- forced through the rollers. characters in advertising. duction line in 1906 were made of Instead of the usual long sheets of dough, Over the years, Kellogg’s products have won recycled fibers. each wheat berry was flattened into a professional as well as consumer small, thin flake. When baked, the acclaim. For example, in 1999, HISTORY flakes tasted crisp and light. Kellogg’s Raisin Bran Crunch cereal Kellogg Company’s world- The San’s patients loved became the only U.S. cereal ever wide leadership in its industry the new food. to win advertising’s prestigious stems from the invention of Seeing the commer- Gold Lion Award. flaked cereal — by accident — cial opportunity of ready- Kellogg Company has at the Battle Creek Sanitarium. to-eat cereal, W. K. Kellogg left the compiled a long record of The “San” was an internationally San in 1906 and formed the Battle food industry leadership and famous Seventh Day Adventist hos- Creek Toasted Corn Flake Company, global business growth. pital and health spa. Its elite patients later renamed Kellogg Company. Kellogg products are manu- were offered a regimen of exercise and Mr. Kellogg boldly advertised his factured in 19 countries and fresh air, plus a strict diet that prohibited new product. He spent much of his working capi- marketed in more than 160 caffeine, alcohol, tobacco, and meat. tal to buy a full-page ad in the July 1906 issue of countries around the world. Sanitarium Superintendent Dr. John The Ladies Home Journal. The results astonished Kellogg Company also has Harvey Kellogg and Will Keith (W. K.) him. Sales burgeoned from 33 cases to 2,900 cases a substantial record of social and Kellogg, his younger brother and busi- per day. With more widespread ads and promo- environmental responsibility. In addi- ness manager, experimented to tions to tell the public about “The Original and tion, Kellogg Company’s largest find good-tasting substitutes for the Best” Kellogg’s Corn Flakes, the small company’s share owner, the W. K. Kellogg hard and tasteless bread on the San’s annual sales surpassed 1 million cases by 1909. 74 W. K. Kellogg quickly expanded into interna- NASCAR, the Olympics, and tional markets. He also expanded his product line, TM, ® Kellogg Company © 2002 Kellogg Company the Susan G. Komen Breast introducing Bran Flakes (1923), All-Bran (1916), Cancer Foundation Race for Rice Krispies (1928), Kellogg’s Frosted Flakes the Cure to bring value-added (1952), and Special K (1955) cereals. Pop-Tarts promotions to its consumers. toaster pastries, launched in 1964, became an American institution of its own and, not surpris- BRAND VALUES ingly, the company’s top-selling convenience food. Nearly a century after Kellogg Kellogg Company also led the way in com- Company was founded, municating good health. In the 1930s, Kellogg Kellogg remains one of the Company became one of the first companies to best-known and most popular print nutrition messages and recipes on cereal brand names in America and package side and back panels. all around the world. In the second half of the 20th century, Kellogg Kellogg’s brands enjoy Company’s commitment to nutrition evolved into tremendous consumer loyalty. ® ® Replace two meals a day with a bowl of Special K or Special K Red Berries cereal for two weeks and you could lose up to six pounds. Results may vary. active support of scientific studies that have Average weight loss 4.2 pounds. Consult a physician before starting any diet or exercise program. See specially marked packages. Details at www.Kelloggs.com For example, more than 40 underscored the value of grain-based foods in a percent of the millions of healthy diet. • Kellogg acquired Keebler Foods Company in Americans who eat Kellogg’s Frosted Flakes In the 1990s, even as worldwide consumption March 2001, the second-leading cookie have been doing so for more than 20 years, and it of cereal continued to increase, Kellogg Company and cracker manufacturer in the United remains America’s favorite cereal. built an increasingly strong convenience-foods States. A multiyear global relationship Kellogg Company’s commitment is to portfolio that now — after its recent acquisition formed between Kellogg and continue to build its brands and to of Keebler Foods — accounts for 43 percent of Disney in 2002, and sev- deliver superior value to consumers the company’s global sales. eral new cereal and snack in the new century. food products have been Consistent with the words of THE PRODUCT introduced to the mar- founder W. K. Kellogg, “We are a Kellogg’s products are a perfect fit for a healthy ket as a result. company of dedicated people making lifestyle. Many are low in fat and often help pro- • In 2002, Kellogg cele- quality products for a healthier world.” vide the dietary fiber that is lacking in the diets of brated the 50th birthday of More information about the com- many Americans. They also provide nutrition, Tony The Tiger™. Ten out- pany’s products, vision, marketing, great taste, and convenience. standing children were awarded and mission is available at Kellogg’s The appeal of Kellogg’s products also encour- $10,000 scholarships, a trip to Web site, www.kelloggs.com, and Keebler’s ages consumers to eat what nutritionists agree is New York City, and the opportunity to Web site, www.keebler.com. the most important meal of the day: breakfast. appear on boxes of Kellogg’s Frosted Flakes® Research shows that people who eat breakfast tend cereal with Tony The Tiger™. All characters and products are trademarks of the © to have less anxiety and improved memory. • Today, Kellogg produces more than 40 different Kellogg Company, 2001 Kellogg Company. ®NASCAR is a registered trademark of the National Children who go to school without breakfast have cereals on six continents. The company markets Association for Stock Car Auto Racing, Inc. ®Komen more trouble concentrating, and their schoolwork its products worldwide and employs over 15,600 Race for the Cure is a registered trademark of The Susan G. Komen Breast Cancer Foundation. ®American can suffer as a result. Regular breakfast eaters have people in its worldwide organization. Airlines and AAdvantage are trademarks of American better diets and generally enjoy better overall Airlines, Inc. TMCartoon Network is a trademark of the health than breakfast skippers. PROMOTION Cartoon Network. ®Disney is a registered trademark of Disney Enterprises. Kellogg’s products also have a long-standing W. K. Kellogg was a master of creative advertis- reputation for consistently delivering the highest ing and promotion. level of quality to consumers around the world. In the company’s early years, “Give the THINGS YOU DIDN’T KNOW ABOUT Grocer a Wink” won shoppers free KELLOGG samples of Kellogg’s Toasted Corn Flakes. The Funny Jungleland Moving Pictures book in 1910 became the first ❍ Kellogg’s Pop-Tarts toaster pastries are of thousands of premiums offered to incredibly popular with American con- consumers who bought Kellogg’s sumers. If all the Pop-Tarts produced each cereal. From the world’s largest elec- year were laid end-to-end, they would cir- tric sign at Times Square in New cle the earth more than six times. York City to small grocery store ❍ With powerful brands such as Kellogg’s windows, the Kellogg name, writ- Raisin Bran and Kellogg’s Raisin Bran RECENT DEVELOPMENTS ten in W. K. Kellogg’s distinctive script — Crunch cereals, Kellogg Company is the With its world-class research and development — reminded the public that “None largest purchaser of raisins in the United resources at W.
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