The leading producer of cereals in the world, Kellogg Company (K - Analyst Report) recently introduced a number of new products, which include all new versions of popular breakfast options and a new cereal.
The company introduced Mini-Wheats Crunch, Kellogg’ Scooby Doo cereal, Special K Chocolately Strawberry cereal, Kellogg’s Brown Sugar Cinnamon Jacks, and Pop-Tarts Oatmeal Delights.
These products are healthy breakfast options containing ingredients like whole grain cereals, fibers and cinnamon. The products are also offered in new flavors to match the continuous demand for new flavors among consumers.
These products target the growing number of health conscious consumers who prefer the convenience of nutritious packaged food given their busy schedule, particularly for breakfast. These cereal options particularly capitalize on the increasing awareness about the importance of breakfast as the first meal of the day.
There is a growing demand for healthy packaged food with all its nutritional values and taste intact. Stress is also given on minimum processing and increased use of natural ingredients.
A peer of General Mills, Inc. (GIS - Analyst Report) , Kellogg has always focused on brand building through product innovation and improved product mix through optimal price/mix combinations. These efforts help drive market share gains and consistent growth in sales and earnings over the long term.
Management plans to continue investing in brand building at a rate equal to or greater than the rate of revenue growth in 2011. For fiscal 2012, innovation is expected to generate sales of $900 million.
Headquartered in Battle Creek, Michigan, Kellogg Company holds solid market position for snacks and frozen foods. We are bullish on the long- term prospects of the company owing to its product innovation, solid brand positioning, geographic diversity and cost saving initiatives. However, its sluggish cereal business, challenges in Europe and rising input costs keep us on the sidelines.
Kellogg Company carries a Zacks #2 Rank in the near term (Buy rating). We currently have a Neutral recommendation on the stock.