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Kellogg's (K) MorningStar Farms & Dunkin' Launch Meatless Sandwich

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Kellogg Company’s (K - Free Report) popular veggie brand, MorningStar Farms, is collaborating with Dunkin’ to launch the Southwest Veggie Power Breakfast Sandwich. This meatless yet tasteful sandwich can now be found at certain countrywide restaurants of Dunkin’ for a limited period. Notably, this new sandwich, which includes a Black Bean Patty from MorningStar Farms, is likely to be an apt on-the-go option for a fresh start to 2021.

Certainly, the Southwest Veggie Power Breakfast Sandwich is likely to benefit MorningStar Farms and in turn Kellogg, as it will offer customers at Dunkin’ a veggie-oriented food option by delivering a plant-based protein patty. This goes in tandem with the evolving trends, wherein customers’ preference for plant-based alternatives has been rising.

To this end, Dunkin’ has been making strong strides for a while. It introduced Beyond Sausage Breakfast Sandwich in partnership with Beyond Meat (BYND - Free Report) , in 2019, and emerged as the first U.S. quick-service restaurant brand to serve Beyond Breakfast Sausage. In fact, the rising popularity of plant-based meats has also kept Beyond Meat on the wheels with regard to undertaking innovation and bolstering its product portfolio. Some recent evidence in this regard include the launch of Beyond Meatballs, Cookout Classic and Beyond Breakfast Sausage Links.

That said, we believe that the launch of Southwest Veggie Power Breakfast Sandwich is likely to be a hit and add to the popularity of both Dunkin’ as well as Kellogg’s MorningStar Farms.

Kellogg on Growth Track

Kellogg boasts a legacy of more than 100 years built on a solid product portfolio and brand identity in both cereals and snacks. Its portfolio consists of strong brands such as Pringles, RXBAR, Bear Naked, Cheez-It and Rice Krispies Treats, among many others. The company is dedicated to augmenting its portfolio through the addition of more products under its existing brands, innovation and marketing initiatives. The company has been focused on investing in brand-building efforts. In this respect, it invests in digital media, consumer promotions and traditional advertising. Also, prudent buyouts have helped the company strengthen its portfolio.

Of late, Kellogg has been benefiting from increased demand for packaged food products amid the coronavirus-led stockpiling. Such trends also helped the company retain its organic sales trend in third-quarter 2020, which moved up roughly 5% (on excluding currency and divestitures). Management stated that demand for packaged foods owing to the pandemic-led higher at-home consumption remained high, though it moderated from the preceding quarter. This, in turn, fueled the company’s sales in retail channels (including solid growth in emerging markets) and helped it counter the declines in food sold in the away-from-home network. Organic sales for 2020 are estimated to have grown around 6%.

Such upsides are likely to help this Zacks Rank #3 (Hold) company counter softness in the Away-from-Home business as well as escalated cost concerns. Shares of Kellogg have dropped 5.7% in the past three months against the industry’s growth of 7.2%.

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