Name: Kellogg CEO Steve Cahillane: 2019 is the Year Kellogg Will Grow Again
Uploaded: 2019-03-07
Duration: 5 min 29 s
Description: “We’ll never do a victory lap,” he says, “but we’re on the right trajectory.'

[ MUSIC ] [ BLANK_AUDIO ] Steve, when you became CEO a year ago, you told everyone, you're not gonna get Kellogg growing again until you get a turn around. And that's what you've been working on. Tell us, what is the most critical part of this turnaround plan? The most critical part of the turnaround is to grow our top line sales. That is the most important thing. You cannot save your way to prosperity. You can't cut costs forever. It's about winning consumer occasions. It's about building great brands. It's about the perfect service and the perfect store. So delivering excellence To our retail partners each and every day. And it's about fundamentally living the bedrock principles that made this company so great to begin with. Founded by Mr. Kellogg this is a company with a heart and soul. It's the only thing that we didn't change. But we changed our strategy to really attack top line sales .>> So how's it going so far? It's going well, we continue to be dissatisfied, we'll never do a victory lap. But our net sales had been declining for the last four to five years. And in 2018, we stabilized and actually got the very, very slight growth. And again, no victory lap, but we're on the right trajectory. And then in 2019, we've stated this will be the year that this company grows again. When people say Kellogg, they think cereal. Where does cereal fit in to your plan? Especially given that a lot of people don't have cereal for breakfast anymore. Cereal is still a very important part of our business. The important thing to note, if you look at it from just a math perspective, we don't have to grow our cereal business in order to grow as a company because we're actually a larger snacks business today than we are a cereal business but our legacy was cereal. Mr. Kellogg's started this company with Corn flakes And we still have a very large business that is very popular. Household penetration in the United States is still over 90 % which means 90 % nof households you walk into are gonna have a box of cereal in their pantry. So what do you see as the hottest growth area you want to get into? One of the hottest areas is the frozen business. Eggo Waffles. It was growing double- digits last year, really reconnecting and re- engaging with consumers by reminding parents and consumers exactly why they love this brand. We took artificial ingredients out, made it much more natural, clean label and then, you know Mom knows she can give her kid an Eggo waffle and it can be out the door on the way to school, it's portable, it's delicious, it's nutritious. You sort of touched on these topics, but As you know, a people's food beliefs have changed dramatically. They're moving away from packaged foods like a lot of the items that are on the Kellogg shelf and going more towards fresh, organic, natural foods. What more are you doing about that? We're addressing that in many ways. So, much of our food is being renovated to actually take artifiicals out and make them much more of what we call a clean label. But do much of the world has become bifurcated there is a growing health and wellness mega trend that's real that we wanna address and we will address through you know new foods like RXBAR which we bought last year which is totally clean labeled. Label, right there on the front of the panel, and absolutely popular with the types of people that you're talking about. But then we've got people who love Froot Loops. And so we're all about choice, but we're clearly addressing that growing trend towards health and wellness. So So on these new food groups that you are trying out, what has been the feedback from your consumers? The feedback has been very positive. People like choice, people like when we bring new news to the marketplace, people like when we bring healthy, very convenient types of foods because if you think about There's a big growing movement [ UNKNOWN ]. It's very difficult to do. You have put in ten different ingredients, and the clean up mess that you have to go through. So if we can get that same type of natural goodness in a package form that's easy, then you really solve a lot of consumer needs and consumer occasions. So we're getting very positive feedback. So what's your timeline to get Kellogg back on a strong growth track? The timeline's now, because 2019 is the year that we grow. So we went out with commentary in the market place and set expectations that, from an organic perspective, we'll be back in growth. And from there we have to continue. And it creates the virtuous cycle, when you grow and you grow your gross profit, you can afford to invest more behind the Brands and ideas that are working. Well you have been going out and talking to investors and the whole Wall Street crowd recently. And as you've been hearing from them. They're getting less patient on having flat earnings, slow sales, and some of them are moving away from your stock. So what are you telling investors that they stick with the stock and with you. Turning about a stubborn declining net sales trend With mature brands, it's one of the most difficult things to accomplish. In the meantime, Kellogg is I think a fantastic bargain. The stock is cheap, it's a 4 % dividend yield, and we're gonna grow again. And so I can't prove it to investors until I prove it to them. So Kellogg has been around for 113 years. When you look into the future, what does success look like for this company? Success looks like a growth company. So when I paint the picture for our team, the story that we wanna write five years from now, ten years from now Remember back when they said that packaged food companies couldn't grow, that brands like Kellogg's were in the past. Well look, we're growing again, we're one of the winners, we've set ourselves apart and we did it the right way. [ BLANK_AUDIO ]

Kellogg CEO Steve Cahillane: 2019 is the Year Kellogg Will Grow Again

Leadership

“We’ll never do a victory lap,” he says, “but we’re on the right trajectory."