real changes, improving performance · emerging h&w trends –consumer awareness • high...

Kellogg Company September 5, 2018

1 of 19

Real Changes, Improving Performance

BostonSeptember 5, 2018

Kellogg Company

Barclays Global Consumer Staples Conference

BARCLAYS CONFERENCE I SEPTEMBER 5, 2018

Forward-Looking Statements

2

This presentation contains, or incorporates by reference, “forward-looking statements” with projections concerning, among other things, the Company’s global growth and efficiency program (Project K), the integration of acquired businesses, the Company’s strategy, zero-based budgeting, and the Company’s sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, charges, rates of return, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, workforce reductions, savings, and competitive pressures. Forward-looking statements include predictions of future results or activities and may contain the words “expects,” “believes,” “should,” “will,” “anticipates,” “projects,” “estimates,” “implies,” “can,” or words or phrases of similar meaning.

The Company’s actual results or activities may differ materially from these predictions. The Company’s future results could also be affected by a variety of factors, including the ability to implement Project K (including the exit from its Direct Story Delivery system) as planned, whether the expected amount of costs associated with Project K will differ from forecasts, whether the Company will be able to realize the anticipated benefits from Project K in the amounts and times expected, the ability to realize the benefits from our implementation of a more formal Revenue Growth Management discipline, the ability to realize the anticipated benefits and synergies from the acquisitions in the amounts and at the times expected, the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices; transportation costs; labor costs; disruptions or inefficiencies in supply chain; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items.

Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to update them publicly.

This presentation includes non‐GAAP financial measures. Please refer to the earnings press release, which is available on the Investor Relations page on the Company’s website, www.Kelloggcompany.com, for a reconciliation of these non‐GAAP financial measures to the most directly comparable GAAP financial measures. Management believes that the use of such non-GAAP measures assists investors in understanding the underlying operating performance of the company and its segments.

http://www.kelloggcompany.com/


2 of 19

BARCLAYS CONFERENCE I SEPTEMBER 5, 2018 3

What a Difference a Year Makes

Transitioned to new management

Launched Deploy For Growth strategy

Completed most of Project K

restructuring, including transition out

of DSD

Acquired RXBAR, increased West

Africa investment, consolidated

Multipro

Ramped up Brand Building investment


Improving PerformanceNet Sales, Organic Growth *

• Big brands back in growth

• Accelerated emerging-markets growth

• Frozen Foods momentum

• Improved velocities in U.S. Snacks

• Stabilized cereal in U.K., Australia, Canada

* Organic growth excludes the impact of acquisitions, dispositions, shipping-days differences, and foreign-currency translation.


3 of 19


Deploying for Growth Means Making Changes


Agenda

• Change in Portfolio & Footprint

• Change in How We Innovate

• Change in How We Build Brands

• Change in Our Growth Trajectory


4 of 19

Shaping a Growth Portfolio

CAGNY 2018 I DEPLOY FOR GROWTH 7


Shaping a Growth Portfolio

Long-Term Trajectory

% of Total Net Sales; Organic-Basis Net Sales Growth


5 of 19


Developed Markets Snacks – Strong Brands

Better Growth for Biggest Brands:

Investment Support for First Time in Years:

Our Own Challenger Brands:

BARCLAYS CONFERENCE I SEPTEMBER 5, 2018

Big Brands Back in Growth:

10

Developed Markets Cereal – Strong Brands

Big Brands Stabilizing:

Our Own Challenger Brands:


6 of 19


Developed Markets Frozen – Strong Brands


Emerging Markets – Building Scale & GrowthKellogg Emerging Markets, Volume in Kilos


7 of 19


Emerging Markets – Strong Brands

Big Global Brands:

Trusted Kellogg Masterbrand:

Expandable Local Brands:


Emerging Markets – Now a Major DriverEmerging Markets as % of Net Sales

Source: Management’s interpretation of data from company reports, and analysts’ published estimates; peers are large-cap, U.S.-based packaged food companies


8 of 19


Agenda






Changing How We Innovate


9 of 19


A Health & Wellness Heritage


Our Innovation Opportunity

• Mega-trends

• Fit for our Portfolio

• New approach


10 of 19


Emerging H&W Trends – Consumer Awareness

• High interest in fiber and plant protein

• Plant-based diet getting recognized for health, environmental, and ethical reasons

• High intuitive link between gut and other bodily functions, especially emotion

• Consumers already demand what we can offer!


Emerging H&W Mega-Trand – Plant-Based Protein

• Specific protein needs now understood

• New techniques to modify plant protein profiles

• Novel fermentation and cellular agricultural processes produce unique protein and micro-nutrient profiles

• Our portfolio and heritage is plant-based foods!

Source: The Balanced Body Nutrition


11 of 19


Emerging H&W Mega-Trend – Microbiome

• Number of scientific-publication references increasing exponentially

• Increasing accessibility of gene sequencing will continue to increase awareness

• Human studies are underway

• We specialize in grains and fiber! Source: PubMed.gov, Trilink Biotechnologies


New Approach – From Trend to Paradigm

Science:Microbiome

Plant-based sustenance

Food:Culinary-inspired

grainoliers

Model:Rapid prototyping,iterative learners


12 of 19


Getting Ideas From New Sources


Renovating Existing Foods


13 of 19


Getting Food & Communication Right

Inner Strength: Digestive Health:


Daring to be Different

Hyper-Convenience

Digestive Wellness

Next-Generation Natural

..


14 of 19


Agenda






Building World Class Brands


15 of 19


Data & Analytics at the Center of What We Do

BetterData

Advanced Analytics

First party database 26 million consumers Receipt / loyalty card

purchase data

Program that identifies individual consumers by device

Enables move from “One message for all” to “Right message for each”

Real time integrated consumer response

Weekly media / content

oprtimization


Shifting Media Mix, Influencing Consumer/Shopper

MEDIA % MIX


16 of 19


Extending Brand Building into eCommerce

Commercial channel

Test & Learn

Brand building


Already Seeing Improved Results

Source: Kellogg Nielsen Market Mix Model

RETURN ON INVESTMENT

COST PER AD IMPRESSION

RETURN ON AD SPEND (BY DATA SET)

% QUALITY IMPRESSIONS

Source: Starcom

Source: Nielsen Catalina Services

Source: Moat

http://www.kvid.co/k/JBSV7538/


17 of 19


Creating Personalized Experiences


Creating Trial and Buzz

https://www.instagram.com/p/Bcc5sNdgGxl/?taken-by=kelloggsricekrispies


18 of 19


Contemporizing and Customizing our Content


Agenda






19 of 19


Moving Toward Sustainable Growth

Reduce Cost

Structure

Invest in Brands &

Capabilities

DeliverSustainable

Growth

• Complete Project K• Sustain ZBB

• Brand Building & Innovation

• Pack Formats• Commercial Execution• Portfolio

• Balanced Top-Line Growth and Margin Expansion


In Summary

• Improving results

• Strengthened portfolio

• Enhanced capabilities

real changes, improving performance · emerging h&w trends –consumer awareness • high...

Documents