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Kellogg (K) Expands Sodexo Partnership to Grow Plant-Based Options

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In line with the strategy to focus on fast-growing plant-based protein options, Kellogg Company’s (K - Free Report) Away From Home channel is expanding its partnership with Sodexo — a well-know provider of catering, hospitality and food retail services. Per the deal, Kellogg will introduce Incogmeato Burger Patties by MorningStar Farms at more than 3,000 Sodexo locations for three years. Initially, Sodexo is introducing the item in the healthcare space.

Notably, the Incogmeato Burger Patties which tastes exactly like beef contains 19 grams of 100% percent plant-based protein. Incidentally, they serve as a robust source of iron, fiber, B12 as well as protein. We note that Sodexo already offers the Spicy Black Bean Burger by MorningStar Farms.

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What Else Should You Know?

Kellogg has been benefiting from increased demand for packaged food products amid the coronavirus-led stockpiling. Such trends helped the company retain its organic sales trend in the first quarter of 2021, with earnings and sales advancing year over year as well as beating their respective Zacks Consensus Estimate. Also, the company’s solid revenue management and productivity efforts helped it tackle cost inflation.

Moreover, the company is benefiting from its solidified capabilities in the digital, e-commerce, and data and analytics arena as well as is on track to expand capacity. Incidentally, online shopping for food witnessed a sea change in 2020, wherein Kellogg’s e-commerce sales soared in triple digits. This was accountable to its brand strength and investments toward enhancing infrastructure and capabilities, which are likely to continue working in the company’s favor. During first-quarter 2021 earnings call, management stated that it is impressed with its emerging market performance. The company has been growing in these regions, even amid the tough pandemic-related conditions. Well, management is focused on expanding scale in emerging markets, by using capacities like data and analytics, innovation as well as e-commerce.

Apart from this, Kellogg has been focused on diversifying its organic offerings. In this regard, the company acquired protein bar maker, Chicago Bar Company, in 2017. Chicago Bar Company makes RXBAR, which is considered one of the fastest-growing nutrition bar brands in the United States. RX now forms part of Kellogg’s organic revenues. Additionally, the company’s Pringles buyout has been lucrative. With the 2012 Pringles deal, Kellogg transformed itself from what was essentially a large U.S. snacks business to a true global snacks player. Well, Pringles emerged as Kellogg’s largest global brand, which is displaying robust momentum across all four regions for quite some time.

All said, we believe that the newly introduced Incogmeato Burger Patties is a step closer to Kellogg’s objective of meeting rising demand for just-like-meat products for a sustainable living. Notably, shares of this Zacks Rank #3 (Hold) company have increased 3.9% in the past three months compared with the industry’s growth of 3.6%.

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