Globally, Special K performed weakly in Kellogg’s third quarter (Q3) with particular difficulties in larger, developed markets like the US and Europe. And John Bryant, CEO of Kellogg, said Special K’s poor performance was a branding mishap that needed to be fixed.
Special K had long been positioned as a diet brand with messaging on how to lose weight over a two-week period – a message Kellogg would change, Bryant told analysts in the company Q3 results conference call yesterday.
“We really need to move that to a weight wellness discussion, really away from reduced calories to the food itself which has tremendous nutrient benefits,” he said.
That, he said, would require a big communication shift but also huge efforts in product development. “We are reinventing all aspects of the Special K brand in 2015.”
From NPD and packaging development to advertising shifts and consumer promotion changes, Bryant said there would be huge change for Special K next year.
“We have new packaging and advertising that highlight the simplicity and goodness of the food. We have consumer promotions that will help people meet their goals, and we have innovation, including Special K protein and Special K food and treats that will directly appeal to consumer trends. We’ll also extend innovations beyond the traditional cereal category, with more hot cereals planned.”
Long-term Special K woes
In Q3 Special K struggled; dragging down Kellogg’s cereal category share in developed markets, but Bryant said the brand had also struggled through the earlier parts of 2014.
Special K had been cited alongside Kashi as an underperforming brand in Kellogg’s August Q2 results as well.
According to IRI data, US annual sales of Special K slumped 9.7% for the year ending August 10, 2014.
David Jago, director of innovation at Mintel, previously told BakeryandSnacks.com that Kellogg would have to work hard to spark renewed interest in Special K. However, he said it would be important not to do anything, “too radical, because let’s not forget it’s still a multi-million brand”.
Jago suggested some new varieties within existing ranges and used its night-themed pack redesign as an example of clever innovation.
Cereal to snacks shift?
Special K brand woes had also spilled into snacks, with particular trouble in Europe, but certain brand had continued to perform well like Pringles – up 7% in net sales globally for Q3.
Asked by an analyst if Kellogg would consider shifting investment efforts away from cereal and towards snacks, Bryant said: “We have 45% cereal, 45% snacks today. And as we look at the 2015 plans, while the slide might suggest more of a focus on cereal, in reality we are investing back in both business and we have some brands that actually cross both businesses. So the investment in Special K and cereal actually also helps the snacks business as well.”
There was plenty of growth opportunity in snacks, particularly with Pringles, he said, and Kellogg was committed to backing that but it had to strike a balance between cereal and snacks.
Over the past decade, Kellogg had shifted business from being 70% cereals, he explained, and future investments would continue to support both cereal and snacks. “We can do both – clearly it’s not the right thing to do to only invest disproportionally in one versus the other.”