In an effort to appeal to the changing health food market, the Pop-Tarts maker plans on increasing the fibre content in its packaged goods and later this year, is launching a Special K Nourish cereal with probiotics — bacterial cultures that promote digestive health.
Americans care more about belly health than low-calorie diets according to the Battle Creek, Michigan-based company. Looking forward, the company plans to position its Special K, Mini-Wheats and Raisin Bran products around the growing interest in gut health.
“Whilst we’re happy with the performance of our taste brands, we know we have to do more to reassert this category’s health and wellness credentials and the way to reinvigorate that segment has always been through nutrition-oriented innovation, claims and brand building, so that’s where we’re focusing our efforts,” said Paul Norman, Senior V.P and President of Kellogg North America, during an Aug. 3 conference call with investment analysts.
Kellogg and other food manufacturers in the packaged foods industry have struggled to increase sales as more people prefer healthier alternatives. The Rice Krispies maker has noticed a decrease in revenue every year since 2013 and hopes that focusing on fibre and probiotics can boost sales.
On Thursday, the company reported to have better-than-expected earnings and revenue in its second quarter as it cut costs on its delivery methods by switching to a warehouse model from direct-store delivery for US snacks. By Thursday afternoon, shares of Kellogg Co. rose by 4 percent to $70.17.
Kellogg reported a net income of $282 million, or 80 cents total per share for the three months prior to July 1. The rise of income is slightly higher than the prior-year period, which had a net income of $280 million, or 79 cents per share . Though, when compared to the same period a year ago, net sales declined 2.5 percent to $3,187 million from $3,268 million.
According to Zacks Investment Research, earnings adjusted for non-recurring costs came to 97 cents per share, which is higher than Wall Street expectations of 92 cents per share. Though revenue fell 2.5 percent to $3.19 billion in the second quarter, it still beat the $3.15 billion that analysts were expecting.
Kellogg expects full-year earnings to range from $3.97 to $4.03 per share, which is well above the estimated $3.91 per share Wall Street analysts were expecting, according to FactSet.