The Pringles acquisition is helping Kellogg become a global player in snacks, CEO John Bryant said in presentation at the CAGNY meeting recently.
Bryant outlined a four-prong growth strategy, with the Pringles brand and the expert personnel that acquisition brought to the company figuring prominently in two of them. The company is focusing on cereals (no surprise there), snacks, frozen foods and specific growth in emerging markets.
“The single biggest strategic change is moving from what was essentially a large US snacks business to a true global snacks player. And that's what Pringles really helps us achieve,” Bryant said.
“(Pringles) does more than just provide this great platform for growth. It has some outstanding synergy opportunities and all we've done so far is quantify some of the obvious synergy opportunities. Most of our synergies are just turning off the P&G allocated costs and picking up the Pringles business and supporting it with the Kellogg infrastructure, and you'll see those synergies flow through 2013, 2014,” he said.
In addition to Pringles experience in the snack sector and in global markets, Bryant said it had manufacturing expertise that Kellogg wanted, too.
“When we had our supply chain challenges a few years ago, we look at best-in-class food manufacturing. And the facility that most impressed us was a Pringles facility here in the United States. And by acquiring that facility, we now have access to the integrated work system that underlies that. And we can now take that, make it Kellogg-specific and roll it across our facilities over the next several years,” he said.
Kellogg completed its acquisition of Pringles from Procter & Gamble in June, 2012. Kellogg paid $2.7 billion for the snack division.
Another place Pringles helps the overall picture is in emerging markets. Bryant called the growth of the consumer class in these markets as “defining event in the food industry.”
“The beauty of Pringles is, again, it gives us two platforms of growth from these emerging markets, not just cereal but also snacks,” Bryant said.
Emerging markets partnerships
In addition to the access that Pringles afforded in these markets, Kellogg has sought expand there via partnerships. Acquisitions in emerging markets are still on the table, Bryant said, but he said these markets are not “acquisition dependant.”
Bryant touched upon two main partnerships: an ongoing relationship with food and beverage manufacturer Ülker in Turkey and a partnership with consumer goods giant Wilmar in China.
“Wilmar is the third-largest consumer goods player in China. It has a tremendous manufacturing/distribution network. And that joint venture is both cereal and snacks. And we're excited about both the cereal opportunity and the Pringles opportunity within China,” Bryant said.
“I think Pringles transforms our international business, gives us improving visibility,” he said.
The presentation was one of a number made by food and beverage companies at the Consumer Analysts Group of New York conference. The Kellogg management team made its presentation on Feb. 20. A transcript of the presentation was made available by seekingalpha.com .