BATTLE CREEK, Mich. – The Kellogg Co. experienced a 9.3% increase in net sales during this year’s third quarter, bringing its net sales for the year to a 5.9% increase overall. This surge was driven by acquisitions and improved snacking consumption, said Fareed Kahn, CFO of the Battle Creek, Mich.-based company, during Kellogg’s third-quarter earnings call Oct. 31.
A laser-like focus on bolstering its snack brands—which Kellogg set its sights on earlier this year—contributed to the category’s growth.
“A large portion of this increased brand-building was behind key U.S. snacks brands and RX [bar]," said Kahn. “The impact on consumption has already been positive.”
Here are three snacking highlights from Kellogg’s third-quarter 2018 …
1. Snacking consumption improved
Net sales for Kellogg’s snacks increased 3% during this year’s third-quarter, bringing the segment’s growth to 5% for the year. This was backed by strides in the cookies, crackers and salty-snacks divisions, said Steve Cahillane, chairman and CEO of Kellogg, on the call. Products that surged during this period included the Cheez-It and Club brands, Pringles, Rice Krispies Treats, Keebler Fudge Shoppe, Keebler Grahams, Mother's and Famous Amos.
“[Snack] consumption data showed continued improvement,” Cahillane said. “Across our snacks categories, we like what we're seeing in base sales and velocities, not to mention restored display activity.”
2. RXbar continues to thrive
Kellogg is reaping the rewards of its acquisition of RXbar. During this year’s third quarter, the company launched new RXbar children’s bars and nut butters, as well as RXbar’s first national advertising campaign. Despite the acquisition already being a year old, RXbar continued to grow at double-digit rates, according to Cahillane. He said customer support, brand health scores, unaided brand awareness and overall brand loyalty for RXbar are sturdy.
“[RXbar] sales continue at a torrid pace, with triple-digit consumption growth and all-commodity volume (ACV) distribution now exceeding 70%, up from less than 30% a year ago,” he said.
3. On the go is essential
On-the-go packaging contributed more than 10% of Kellogg’s total snacks sales in the third quarter, said Kahn. These package formats were seen in successful snack brands such as Pringles and Cheez-Its and sold individually or in multipack boxes.
Cahillane said Kellogg’s on-the-go and single-serve formats are outpacing the rest of the company’s categories and are incremental to Kellogg’s overall growth.
“Our on-the-go offerings grew consumption at just about a double-digit rate in the quarter,” he said. “We're investing for long-term growth, and building demand and scale for on-the-go is a strategic priority for us.”