Industry News

Kellogg to cut 7% of workforce in cost-cutting plan

Kellogg Co. says it will cut 7% of its global workforce, or about 2,000 jobs, as part of a four-year cost-saving plan amid a persistent slowdown in breakfast items and snacks. The program, dubbed “Project K,” will result in pretax charges of $1.2 billion to $1.4 billion, the Battle Creek, Mich.-based company says. Kellogg had about 31,000 employees as of Dec. 29, 2012, according to regulatory filings.

Competitors such as J.M. Smucker Co., Kraft Foods Inc. and ConAgra Foods Inc. have battled to get consumers to stock up their shopping carts as unemployment and declining incomes make them spend less. With store promotions failing to spur sales growth, Kellogg has resorted to cost-cutting to boost profitability.

“It’s not worth discounting if you’re not driving volume,” reports Brian Yarbrough, an analyst for Edward Jones & Co., St. Louis. “You’ve got to retrench, you’ve got to look for cost savings, you’ve got to look for ways to be more productive, whether it’s through the supply chain or manufacturing.”

The challenge for manufacturers is figuring out how to get consumers shopping again, he adds.

The issue is hitting Kellogg particularly hard at the breakfast table. Sales growth for morning foods has slowed with the increased competition from growing options such as Greek yogurt and oatmeal bars. Net sales were little changed in the third quarter, hurt also by snacks, Kellogg also reports.

Cereal sales have slid particularly among baby boomers and higher income consumers as they try to eat healthier and reach for a broadening array of breakfast choices, says Kellogg CEO John Bryant. He plans to add more healthful ingredients such as Omega 3 fatty acids to compete with everything from eggs to yogurt, rather than focusing as much on creating new flavors.

Source: www.bloomberg.com

Did you enjoy this article? Click here to subscribe to Snack Food & Wholesale Bakery Magazine 

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

POP Gourmet Foods

For the complete story on at POP Gourmet Foods, the 2015 Snack Food & Wholesale Bakery Snack Producer of the Year, see “POP Gourmet’s explosive momentum.”

4/14/15 3:00 pm EDT

Gluten Free: The Rising Growth Market

On Demand Our expert speakers address processing, labeling and food-safety aspects of Gluten-Free and prevailing and emerging trends in Gluten-Free product development specific to grain-based snacks and bakery

Snack Food & Wholesale Bakery Magazine

april cover

2015 April

April's Snack Food & Wholesale Bakery publication features our cover story: "Naturally better at RW Garcia" Plus our Tortilla Trends section!

Table Of Contents Subscribe

Breakfast Poll

Breakfast reportedly is the most important meal of the day. What does your daily breakfast consist of?
View Results Poll Archive

THE SNACK AND BAKERY STORE

organic-production-&-food-q.gif
Organic Production and Food Quality: A Down to Earth Analysis

Effects of Organic Production on Food Quality is the first comprehensive book on how organic production methods influence the safety and quality of foods, based on an unbiased assessment of the latest scientific findings.  The title is a 'must-have' for everyone working within the food industry.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

STAY CONNECTED

Facebook IconTwitter IconYoutube IconLinkedIn Icon

The Weekly Mix

Operations Weekly Logo

Written by Snack Food & Wholesale Bakery editors, our Operations Weekly weekly enewsletter provides bakers and snack food manufacturers with up-to-the-minute news, ideas and industry trends.

Sign up today!