Kellogg eyes all-natural cereals, snack bars

IN RESPONSE to growing consumer demand for natural ingredients, Kellogg Co. has recently announced it will stop using artificial colors and flavors in its Corn Flakes and Rice Krispies by the end of 2018.

The world's biggest breakfast cereal maker said 75% of its cereals in North America do not use artificial colors and more than half are without artificial flavors. Kellogg’s plan to turn all-natural for its cereal and snack bars makes it one of the latest in a rising number of US food companies looking to remove synthetic ingredients from their products following consumer health concerns, according to an article on Bangkok Post.

The shift to healthier products is part of the company’s transformation, which also involves cutting costs.
The 109-year-old company, whose cereals have been a popular breakfast choice for decades, launched a multiyear cost cutting plan in 2013, with savings generated from the initiative used to refresh the Special K brand and launch healthier foods such as granola and muesli in new markets. 
 
Repositioning the Special K cereal as "wellness" instead of a diet product has improved sales, according to the company.  Introducing a gluten-free version and new flavors has also boosted demand.

This presents good news amid declining sales resulting from the growing shift to cooked meals and less processed foods. Kellogg’s US snacks sales, the company’s biggest, dropped 2% while its US morning foods business sales, including cereals, slipped 2.2%.

The company earned 92 cents per share at $3.498 billion revenue excluding items, against analysts’ expectation of $3.466 billion revenue at 92 cents per share, according to Thomson Reuters I/B/E/S. Nevertheless, the 5.1% sales decline was the seventh time in eight quarters. Net income attributable to Kellogg for the quarter ending July 4 dropped 24.4% to $223 million, equivalent to 63 cents per share.