Kellogg Case Study

Kellogg Company

Case Study

Strengths

- A Leading maker of grain-based breakfast cereals for over a hundred years

- 43% market share for “Ready to eat” cereals market share in the US

- A leader producer also of convenience foods (i.e. cookies, toaster pastries, ect.)

- Products are manufactured in 17 countries and marketed in over 180 countries

- First company to use full-color magazine advertising and widespread consumer sampling.

- Created consistent icons to represent its brands- this made it easy for people regardless of where they lived to recognize the brand.

- W.K. Kellogg Foundation- one of the world’s largest philanthropic organizations.

- Carlos Guitterrez became CEO when Kellogg was struggling and helped the company to turn around in 1999.

- Kellogg in 2005 was considered a very profitable company that generates more cash each year than it needs to pay dividends and fund capital expenditures.

- Has some of the most well known brands on the market

- Kellogg acquired Kashi (natural cereal and convenience food maker).

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Weaknesses

- Closed its original plant in Battle Creek, Michigan (The South Plant) because it was too labor intensive and inefficient. This generated negative press in the public and gave Kellogg’s a bad reputation.

- Kellogg acquired Keebler from Flowers Industries for cash, incurring about $6 billion in debt to do so.

- Kellogg’s Keebler unit faces strong competition from the world’s largest maker of cookies and crackers- Nabisco division of Kraft Foods and from Frito-Lay division of PepsiCo.

- Kellogg’s primary competitor in ready to eat breakfast is General Mills.

- When General Mills and Nestle entered the European cereal market as the Cereal Partners of the World.

- Kellogg also faces competition from private-label cereals (A&P, Wal-Mart, Stop and Shop, which lowers the cost of the product). They also offer everyday low pricing and free consumers from cutting out coupons.

- As the baby boomer generation ages will begin to seek healthier food choices, Kellogg is only now beginning to emphasize healthy products.

Strengths

Weight Rating Weighted Score

A Leading maker of grain-based breakfast cereals for over a hundred years

0.08 3 0.21

43% market share for “Ready to eat” cereals market share in the US

0.09 4 0.34

A leader producer also of convenience foods (i.e. cookies, toaster pastries, ect) 0.08 3 0.23

Products are manufactured