Kellogg's Global Sales
International Revenues Profit From Snacks But Cereals Lag
Kellogg's commands 40% of global breakfast cereal sales & makes about 50% of Asian prepackaged cereals. So why does Asia represent only 2% of total company revenues?
According to Kellogg's 2006 annual report, full-year revenues were US$11 billion making Kellogg's the world's leading producer of ready-to-eat cereal products. Popular cereal brands include Kellogg's Corn Flakes, Mini-Wheats, Raisin Bran, Rice Krispies and Special K.
Kellogg's is also a leading seller of convenience foods including fruit snacks, cereal bars, crackers, toasted pastries, cookies and frozen waffles. Well-known Kellogg snack brands include Nutri-Grain, Pop-Tarts, Keebler and Eggo. Kellogg's also offers healthy food brands like Morningstar Farms and Natural Touch.
Kellogg's Worldwide Sales
Kellogg's has operations in 17 countries. Products are sold in more than 180 countries around the globe. Below is a list of Kellogg's sales in 2006 by geographic region.
- North America ... US$7.4 billion (67.3% of total sales, up 8% from 2005)
- Europe ... $2.1 billion (19.7%, up 6.5%)
- Latin America ... $891 million (8.2%, up 8.3%)
- Asia Pacific ... $523 million (4.8%, down 2%)
Overall Kellogg's annual sales in 2006 were up 7.2%. Annual sales outside North America posted a 5% increase led by Latin America's 9% gain, although Mexico lagged with growth of about 5%. United Kingdom, home to the largest Kellogg's business in Europe, also gained about 5%.
International cereal sales generate 27.6% of total sales, and rose 2.5% in 2006. Convenience food sales from international sources soared an impressive 26%, although that category comprises only 5% of Kellogg's overall revenues.
Wal-Mart, Kellogg's largest customer, accounts for an estimated 5% of the food-maker's international revenues.
Kellogg's Asia-Pacific Sales Lag
Asia-Pacific, which includes Australia, saw its sales slide 2% in 2006.
In year 2000, Kellogg's decided not to expand its operations in China partly because western breakfasts like cold cereal with milk are unpopular in Asia. For example, a popular Chinese breakfast combines fried bread and rice.
The company is now looking at buying local cereal and snack companies in China and Southeast Asia in bid to double Kellogg's Asian sales by 2010. Kellogg's already exports a small amount of cereal for sale in China, but prefers to build a new plant in China once a private sector partner is found. A Chinese plant will decrease exports of Kellogg's prepackaged products to China, while adding to Kellogg's set of Asian factories in South Korea, Japan, Thailand and India.
Sources: Kellogg's Q4 2006 Earnings Release & Conference Call from Kelloggs.com
