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Yahoo
17-05-2025
- Business
- Yahoo
Kellogg sounds alarm on unexpected shift in customer behavior
Food giant Kellogg () , which owns popular cereal brands such as Froot Loops, Frosted Flakes, and Apple Jacks, has noticed that customers are starting to change their minds about breakfast. In response to this trend, its CEO is flagging what's causing this significant shift in customer behavior. In its first-quarter earnings report for 2025, Kellogg revealed that its organic net sales declined by 5.6% year-over-year during the quarter, while its net income dropped by a whopping 45.5%. 💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💵 In the report, Kellogg CEO Gary Pilnick said that the company's first-quarter performance was 'lower than expected.'In response to weaker consumer demand, Kellogg is predicting that its organic net sales this year will shrink by 2% to 3%, compared to its previous expectation of a 1% decline. In prepared remarks to investors, Pilnick flagged that the company's cereal category faced declining sales as consumers are increasingly leaning more toward cereal brands that focus on health and nutrition, which have rapidly become more popular. 'Granola, natural and organic cereal, and health-forward cereal brands experienced double-digit growth in the quarter, while our N&O (natural and organic) brands did not participate in this growth at nearly the same rate,' said Pilnick in his remarks. During an earnings call on May 6, Pilnick said he doesn't believe the trend will lose steam anytime soon. 'In our category, what we're also seeing is some of our consumers are also willing to pay more,' said Pilnick. 'It's an interest in health and nutrition. I think that's going to continue. I think this is simply the continuation of a trend that we saw coming that at some point started to accelerate.'Recently, consumers have been cracking down on the ingredients in their food products as they have grown more health-conscious in recent years. This is a trend that kicked off after the Covid-19 pandemic. Seed oils such as canola, corn, sunflower, vegetable, and palm are some of the many ingredients that have recently drawn scrutiny from consumers for being overly processed and contributing to inflammation in the body. Despite being approved by the U.S. Food and Drug Administration, synthetic dyes such as Red 40, Blue 1, and Yellow 6, which are commonly found in processed foods, have also faced criticism for being linked to health issues such as cancer and hyperactivity in children. Texas Attorney General Ken Paxton in April 2025 began investigating Kellogg for alleged false claims that it had removed artificial dyes from its products, when it appears that some of these ingredients are still present in a few Kellogg's cereals, at least in the U.S. Newer cereal brands offering products without these ingredients include Seven Sundays, Magic Spoon, and Three Wishes, which have grown in popularity. During the earnings call, Pilnick said that consumers focusing more on healthier cereal options can be beneficial for the company. 'The category is holding in, and it's shifting,' said Pilnick. 'And again, we will shift with it.' Kellogg plans to rapidly accelerate its health-focused initiatives in order to win back customers. This includes boosting advertising for its natural and organic cereal brands such as Kashi. More Retail: AT&T quietly issues stern warning to customers Sam's Club makes a big change to a beloved membership perk GameStop announces risky move amid store closures Kellogg also aims to emphasize in an upcoming advertising campaign that its cereals, such as Frosted Flakes, Corn Flakes, and Rice Krispies, start with four simple ingredients before vitamins and minerals are added. It plans to communicate this message in updated front-of-package claims. In addition, Kellogg will highlight that its cereals contain protein and fiber, two ingredients the company claims consumers often seek in their food. 'We know that there's continued interest in value and growing interest in health and wellness,' said Pilnick. 'That's the place that we're going to go.'
Miami Herald
07-05-2025
- Business
- Miami Herald
Kellogg sounds alarm on unexpected shift in customer behavior
Business Kellogg sounds alarm on unexpected shift in customer behavior Food giant Kellogg (KLG) , which owns popular cereal brands such as Froot Loops, Frosted Flakes, and Apple Jacks, has noticed that customers are starting to change their minds about breakfast. In response to this trend, its CEO is flagging what's causing this significant shift in customer behavior. In its first-quarter earnings report for 2025, Kellogg revealed that its organic net sales declined by 5.6% year-over-year during the quarter, while its net income dropped by a whopping 45.5%. Don't miss the move: Subscribe to TheStreet's free daily newsletter In the report, Kellogg CEO Gary Pilnick said that the company's first-quarter performance was "lower than expected." Related: Coca-Cola suffers an alarming loss from major boycott In response to weaker consumer demand, Kellogg is predicting that its organic net sales this year will shrink by 2% to 3%, compared to its previous expectation of a 1% decline. Kellogg's breakfast cereals aren't making it into consumers' grocery carts as often. Bloomberg/Getty Images Kellogg CEO sheds light on what's causing declining sales In prepared remarks to investors, Pilnick flagged that the company's cereal category faced declining sales as consumers are increasingly leaning more toward cereal brands that focus on health and nutrition, which have rapidly become more popular. "Granola, natural and organic cereal, and health-forward cereal brands experienced double-digit growth in the quarter, while our N&O (natural and organic) brands did not participate in this growth at nearly the same rate," said Pilnick in his remarks. During an earnings call on May 6, Pilnick said he doesn't believe the trend will lose steam anytime soon. "In our category, what we're also seeing is some of our consumers are also willing to pay more," said Pilnick. "It's an interest in health and nutrition. I think that's going to continue. I think this is simply the continuation of a trend that we saw coming that at some point started to accelerate." Related: PepsiCo CEO addresses major customer concerns amid low sales Recently, consumers have been cracking down on the ingredients in their food products as they have grown more health-conscious in recent years. This is a trend that kicked off after the Covid-19 pandemic. Seed oils such as canola, corn, sunflower, vegetable, and palm are some of the many ingredients that have recently drawn scrutiny from consumers for being overly processed and contributing to inflammation in the body. Despite being approved by the U.S. Food and Drug Administration, synthetic dyes such as Red 40, Blue 1, and Yellow 6, which are commonly found in processed foods, have also faced criticism for being linked to health issues such as cancer and hyperactivity in children. Texas Attorney General Ken Paxton in April 2025 began investigating Kellogg for alleged false claims that it had removed artificial dyes from its products, when it appears that some of these ingredients are still present in a few Kellogg's cereals, at least in the U.S. Newer cereal brands offering products without these ingredients include Seven Sundays, Magic Spoon, and Three Wishes, which have grown in popularity. Kellogg unveils plan to attract customers During the earnings call, Pilnick said that consumers focusing more on healthier cereal options can be beneficial for the company. "The category is holding in, and it's shifting," said Pilnick. "And again, we will shift with it." Kellogg plans to rapidly accelerate its health-focused initiatives in order to win back customers. This includes boosting advertising for its natural and organic cereal brands such as Kashi. More Retail: Kellogg also aims to emphasize in an upcoming advertising campaign that its cereals, such as Frosted Flakes, Corn Flakes, and Rice Krispies, start with four simple ingredients before vitamins and minerals are added. It plans to communicate this message in updated front-of-package claims. In addition, Kellogg will highlight that its cereals contain protein and fiber, two ingredients the company claims consumers often seek in their food. "We know that there's continued interest in value and growing interest in health and wellness," said Pilnick. "That's the place that we're going to go." Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published May 7, 2025 at 12:47 PM.
Yahoo
06-05-2025
- Business
- Yahoo
WK Kellogg cuts annual sales, profit forecasts on softening packaged food demand
(Reuters) -WK Kellogg cut its annual organic sales and core profit forecasts on Tuesday after weaker consumer spending on its higher-priced products including Frosted Flakes and Apple Jacks cereals. Shares of the Battle Creek, Michigan-based company fell nearly 3% in premarket trading after it missed first-quarter sales and profit expectations. Customers are bracing for another inflationary market burdened by price increases as companies try to navigate higher input costs brought on by U.S. President Donald Trump's erratic tariff implementation. WK Kellogg has already witnessed pushback from consumers after it ramped up prices over the last several quarters to counter input costs, pushing cost-conscious shoppers away. Its product pricing rose 3%, while volumes slumped 8.6% in the reported quarter. Kraft Heinz and Kellanova have also reported bleak quarterly results, given subdued consumer spending in the United States. The U.S. economy contracted for the first time in three years in the first quarter, hit by a flood of imports as businesses raced to avoid higher costs from tariffs, as well as softening consumer spending. WK Kellogg expects full-year organic net sales to now decrease between 2% and 3%, compared with a prior expectation of a 1% fall. It expects full-year net adjusted EBITDA, or earnings before interest, tax, depreciation and amortization, between $270 million and $275 million, compared with a previous expectation of between $286 million and $292 million. The Froot Loops maker said its 2025 outlook includes a modest impact from tariffs, primarily related to sourcing raw materials outside North America. WK Kellogg's quarterly net sales fell 6.2% to $663 million, compared with analysts' average expectation of $679.5 million, according to data compiled by LSEG. It reported earnings of 20 cents per share, missing analysts' estimate of 40 cents per share. (Reporting by Ananya Mariam Rajesh and Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai)
Yahoo
16-04-2025
- Health
- Yahoo
The Attorney General of Texas Is Investigating Kellogg's for Falsifying Health Claims
Texas Attorney General Ken Paxton has opened an investigation into WK Kellogg Co, commonly known as Kellogg's, for advertising its products as healthy. Paxton's statement says Kellogg's cereals contain petroleum-based artificial dyes that have been linked to multiple health problems. Although Kellogg's has previously promised to remove all artificial dyes and flavorings from its products by 2018, this investigation alleges that it has failed to do Attorney General Ken Paxton wants you to take a long, hard look at your cereal box. In early April, Paxton released a statement alleging that cereal giant WK Kellogg Co violated 'Texas consumer protection laws' after the company advertised several of its products as 'healthy.' WK Kellogg Co — colloquially known as "Kellogg's" — is the North American company that was spun off from Kellanova, previously titled the Kellogg Company, in 2023. 'A critical part of fighting for our children's future is putting an end to companies' deceptive practices that are aimed at misleading parents and families about the health of food products,' Paxton says. 'Artificial food colorings have been shown to have disastrous impacts on health, and in no world should foods that include these dyes be advertised as 'healthy.'"Here's what you need to know about the investigation. Paxton's office specifically points to 'cereals such as Froot Loops, Apple Jacks, Frosted Flakes, and Rice Krispies' as prime targets in the investigation, noting that the brand often touts these cereals as 'healthy' choices. However, the office takes issue with this claim as it says the cereal company continues to use 'petroleum-based artificial food colorings,' which the attorney general explains have been linked to health issues like "hyperactivity, obesity, autoimmune disease, endocrine-related health problems, and cancer in those who consume them." 'There will be accountability for any company, including Kellogg's, that unlawfully makes misrepresentations about its food and contributes to a broken health system that has made Americans less healthy,' Paxton adds. Paxton's office isn't wrong about the connection between artificial food colorings and hyperactivity. A 2007 study published in the peer-reviewed medical journal Lancet showed that artificial colors and the preservative sodium benzoate can cause increased hyperactivity in children. A more recent review of research in 2022 on the connection between blue food coloring and Attention Deficit Disorder (ADHD) symptoms in kids concluded: "The studies that were reviewed in this article show that diet, especially consumption of artificial food coloring, produces statistically significant increases in ADHD symptoms in children." Related: Are Natural Food Dyes Better? Experts Weigh In on the Pros and Cons 'The evidence now shows pretty conclusively that when some kids eat these, they will experience nervous system effects that look like ADHD,' Thomas Galligan, a scientist who focuses on food additives at the Center for Science in the Public Interest, told NPR in 2023. 'There are 27 human clinical trials that show these dyes do, in fact, harm children's behavior.' More research is needed to determine if artificial dyes are connected to cancer, although some dyes do contain contaminants that are possible carcinogens. Red Dye No. 3 has been most clearly shown to increase the risk of cancer but is not used in Kellogg's cereals. According to Paxton, the cereals listed in his investigation include 'blue, red, yellow, green, and orange artificial food colorings.' In 2015, Kellogg's pledged to remove artificial colors and flavors from all its cereals and snack bars by the end of 2018. "We have been working to remove artificial colors and flavors across Kellogg's branded cereals and a variety of Kellogg's branded snack bars as well as Eggo frozen foods," Paul Norman, then president of North American operations for Kellogg's, shared at the time, as reported by USA TODAY. 'Our goal is to complete this transition by the end of 2018.' However, as Paxton's office points out in its press release, while Kellogg's has reformulated these cereals in Canada and Europe to meet stricter ingredient standards, the same products remain largely unchanged in American grocery stores. In October 2024, protestors stood outside the cereal company's Michigan headquarters to demand that it make good on the promise. Following the protest, Kellogg's shared in a statement: 'Today, more than 85% of our cereal sales contain no colors from artificial sources… We continuously innovate new cereals that do not contain colors from artificial sources across our biggest brands, offering a broad choice of nourishing foods for our consumers.' This investigation comes at a time of increased scrutiny toward artificial dyes in America's food supply. In January, the Food and Drug Administration (FDA) banned Red Dye No. 3 in food, beverages, and ingested drugs in the United States. The dye must be removed from food products by mid-January 2027 and from ingested drugs in 2028. This ban was based on the authority of what's known as the Delaney Clause, part of the Food Additives Amendment of 1958. "The Delaney Clause is clear; the FDA cannot authorize a food additive or color additive if it has been found to cause cancer in humans or animals," Jim Jones, the FDA's deputy commissioner for human foods, said in a statement about the ban. Several states have their own bans on dyes and additives, including California, which banned Red Dye No. 3, brominated vegetable oil, potassium bromate, and propylparaben in 2023. Related: Experts Say Trump's Tariffs Could Put Healthy Eating Out of Reach for Many Americans West Virginia recently passed new law barring the use of Red Dye No. 3, Red Dye No. 40, Yellow Dye No. 5, Yellow Dye No. 6, Blue Dye No. 1, Blue Dye No. 2, and Green Dye No. 3, along with the preservatives butylated hydroxyanisole and propylparaben, from being used in drugs or food products sold in the state. The dyes will be banned from use in "any meal served in a school nutrition program" starting on August 1 and will be prohibited statewide beginning January 1, 2028. Consumers who want to stay informed can keep up with ongoing state-level legislation that targets dyes and preservatives by using the Environmental Working Group's interactive map, which documents food bills across the country. Food & Wine has reached out to Kellogg's for comment and will update this story if we receive a response. Read the original article on Food & Wine
USA Today
08-04-2025
- Business
- USA Today
Texas AG Ken Paxton launches investigation into Kellogg's over artificial food colorings
Texas AG Ken Paxton launches investigation into Kellogg's over artificial food colorings "Our products – and the ingredients we use to make them – are compliant with all applicable relevant laws and regulations," Kellogg's said in October 2024. Show Caption Hide Caption Protesters demand Kellogg remove artificial colors from cereals Protesters gathered outside WK Kellogg Co.'s Michigan headquarters, demanding the company remove artificial dyes from its cereals sold in the US. unbranded - Newsworthy On Sunday, Texas Attorney General Ken Paxton announced an investigation into Kellogg's for its "healthy" products with artificial flavors and dyes. In 2015, Kellogg's said it would eliminate all artificial ingredients by 2018, but consumers are still waiting for this change. In 2024, actress Eva Mendes led a protest against Kellogg, asking the company to fulfill its promise. Texas' attorney general opened an investigation over the weekend into Kellogg's for potentially breaking the state's consumer protection laws. On Saturday, Texas Attorney General Ken Paxton announced that his office had opened an investigation into WK Kellogg Co. for marketing its products as "healthy," despite containing "petroleum-based artificial food colorings that have been linked to hyperactivity, obesity, autoimmune disease, endocrine-related health problems and cancer in those who consume them." Paxton pointed to Kellogg's cereals, such as Froot Loops, Apple Jacks, Frosted Flakes and Rice Krispies. 'A critical part of fighting for our children's future is putting an end to companies' deceptive practices that are aimed at misleading parents and families about the health of food products,' Paxton said in a news release. 'Artificial food colorings have been shown to have disastrous impacts on health, and in no world should foods that include these dyes be advertised as 'healthy.' There will be accountability for any company, including Kellogg's." In 2015, Kellogg's joined a consortium of food manufacturers, including General Mills, that pledged to eliminate artificial ingredients, USA TODAY previously reported. Kellogg's said it would remove these ingredients by 2018, but consumers remain waiting for the change. Last year, American actress Eva Mendes made headlines for spearheading a protest against Kellogg's, as the company had not met its promise. Dozens protested outside Kellogg's headquarters in Michigan, and more than 400,000 people signed a petition asking the food manufacturer to change its operations, the Associated Press reported. "Our products – and the ingredients we use to make them – are compliant with all applicable relevant laws and regulations," Kellogg's said in a statement to USA TODAY in October 2024. "We remain committed to transparently labeling our ingredients so consumers can easily make choices about the food they purchase." Kellogg's did not immediately respond when contacted by USA TODAY on Monday and Tuesday. What artificial ingredients are in Kellogg's cereals? Several Kellogg's products include artificial ingredients. For example, Froot Loops contain Red 40, Yellow 5, Blue 1, Yellow 6 and butylated hydroxytoluene (BHT), while Apple Jacks are made of Yellow 6, Yellow 5, Red 40 and Blue 1. Ingredients like Red 40, Yellow 5, Yellow 6 and Blue 1 are synthetic dyes used to give food, drugs and cosmetics color. According to WebMD, BHT is a lab-made chemical that can be used as a food preservative and is considered safe in the amounts found in processed food. However, there is not enough research to determine how safe BHT is in medicinal doses or on the skin. Do artificial ingredients cause irreversible damage? In January, the Food and Drug Administration banned Red No. 3, an additive that gives food and drinks a bright, cherry-red color. Studies have shown that male lab rats exposed to high levels of Red No. 3 develop cancer, but humans are typically exposed to much lower levels of the additive. In California, and the entire European Union, Red 40, which is used in several Kellogg's products, is banned as some studies link the artificial food dye to ADHD in children. However, the FDA says that most children have no adverse effects to the additive. "The reality is these have no nutritional or other benefits. They're totally aesthetic," Asa Bradman, a professor and chair of the University of California Merced's public health department, previously told USA TODAY. Contributing: Lori Grisham, Alyssa Goldberg and Hannah Yasharoff USA TODAY Network Greta Cross is a national trending reporter at USA TODAY. Story idea? Email her at gcross@
