Latest news with #Pilnick
Yahoo
15-05-2025
- Business
- Yahoo
Breakfast cereal is in dire need of a makeover
This story was originally published on Food Dive. To receive daily news and insights, subscribe to our free daily Food Dive newsletter. After years of shrinking sales, cereal is no longer the star of breakfast. Now, food giants like General Mills and WK Kellogg are plotting how to get the former staple back on the table. Shifts in morning routines, rising costs and cereal's sugar-laden image have dragged down the category for years. But as consumers become even more concerned with inflation, those declines have recently accelerated, and companies are making it more of a priority to turn around the cereal category. At Froot Loops maker WK Kellogg, first-quarter sales declined 6.2% compared to last year. A similar story is playing out at its competitors. General Mills CEO Jeff Harmening told investors in March that cereal's performance "wasn't great," while Post Holdings, which owns brands like Fruity Pebbles, recently closed two cereal plants amid headwinds in the category. Many cereal giants are beginning to lean into consumer demand for healthier foods, noting that shoppers are willing to pay more for offerings they perceive to have more nutritional value. Upstarts like Magic Spoon, which offers a high-protein and no-sugar cereal, have taken away market share from traditional stalwarts. PepsiCo's Life brand debuted a multigrain cereal, Mighty Life, this year aimed at boosting immunity. 'It's a real dichotomy. You see some of the more premium organic natural [cereal] marketed as healthier for you …. doing well in the category while the overall category is not performing well,' Jeff Zadoks, chief operating officer of Post Holdings, told investors this month. 'There's a pocket of consumers that are spending for what they perceive as better for them, and are willing to pay essentially whatever necessary to get that type of product.' To reach that pocket of consumers, big companies are moving to relaunch big-name brands with added protein options or lower sugar. Kellogg debuted Special K Protein, while General Mills introduced Cheerios Protein. 'As we're seeing a shift in the category, we need to shift with it,' Kellogg CEO Gary Pilnick said on an earnings call in early May. Companies are also pouring more into marketing or redesigns to remake cereal's image as sugary or unhealthy. WK Kellogg faced protests to remove artificial dyes from its cereals, and manufacturers now face pressure from Health and Human Services Secretary Robert F. Kennedy Jr. to phase out synthetic colors as part of his 'Make America Healthy Again' initiative. 'We do believe the entire cereal category should be perceived better from a health perspective,' Pilnick said. WK Kellogg intends to focus more on health and wellness brands, including Special K and Kashi, which is being relaunched. Pilnick said consumer interest in health and nutrition is 'more than a fad,' and the company is accelerating plans to lean into those better-for-you attributes. 'While there are smaller brands in the market that are winning, we could do that, too,' Pilnick told investors. Recommended Reading Post Holdings sees cereal demand dip as Gen Z seeks healthier breakfasts
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
07-05-2025
- Business
- Yahoo
Lower Q1 sales, tariff outlook sees WK Kellogg cut forecasts
A decline in first-quarter sales and concerns about the impact of US tariffs have led WK Kellogg to lower forecasts for the full year. The cereal maker expects its organic net sales to decline by 2-3% in 2025, compared to its previous projection of a 1% decrease. WK Kellogg has also lowered its forecast for adjusted EBITDA. It now expects that metric to be, at best, flat year on year, or, at worst, down 2%. The group had been forecasting an increase of 4-6%. Announcing its first-quarter financial results yesterday (6 May), WK Kellogg pointed to "weaker than expected consumption trends". It also said its outlook "now includes a modest impact from tariffs, primarily related to the sourcing of raw materials outside of North America". The company said its forecast "assumes that most of our production remains exempt from tariffs on imports from and exports to Canada and Mexico". However, it added: "There can be no assurance that this suspension will remain in place indefinitely or whether any new or expanded tariffs may further impact our business and results of operations." For the quarter to 29 March, WK Kellogg reported a 45.5% drop in net income to $18m. Net sales declined 6.2% of $663m compared to the same period last year. Organic net sales fell 5.6% to $667m. The Rice Crispies manufacturer reported a first-quarter operating profit of $20m, down 56.5% year-over-year. Adjusted EBITDA also fell 4% to $72m, primarily due to lower sales volumes. WK Kellogg chairman and CEO Gary Pilnick said: 'Despite the lower than expected first quarter performance which resulted in revising our 2025 outlook, we continue to make great progress on our strategic priorities, including the supply chain modernisation initiative. "We remain on track to deliver circa 500 basis points of margin improvement as we exit 2026." Pilnick added: 'In the first quarter, we saw consumers continue to focus on health and nutrition, which we view as a positive development for the category. 'We believe our portfolio is well positioned to meet the needs of our consumers, and we are taking further actions to accelerate our plans in this area.' In August, WK Kellogg announced the closure of its plant in Omaha, Nebraska and scaled back production at its Memphis facility in Tennessee. Navigate the shifting tariff landscape with real-time data and market-leading analysis. Request a free demo for GlobalData's Strategic Intelligence here. "Lower Q1 sales, tariff outlook sees WK Kellogg cut forecasts" was originally created and published by Just Food, a GlobalData owned brand.
