A comprehensive background of Kellogg's containing its History and Origins, Early Evolution, Modern Business, Global Expansion, Company Structure, Recent Efforts and Company DNA. As one of the chapters of the book FMCG: The Power of Fast-Moving Consumer Goods by authors Greg Thain and John Bradley. For more details on their success story and that of other leading FMCG companies, check www.fmcgbook.com or Amazon http://amzn.to/1jRyd20.

2. History & Origin . . . . . . . . . . . . . . . . . . . 3
Early Evolution . . . . . . . . . . . . . . . . . . . .5
Global Expansion . . . . . . . . . . . . . . . . 14
Modern Business . . . . . . . . . . . . . . . . . 16
Company Structure . . . . . . . . . . . . . . 19
Recent Efforts . . . . . . . . . . . . . . . . . . . .20
Company DNA . . . . . . . . . . . . . . . . . . 23
Summary . . . . . . . . . . . . . . . . . . . . . . . 24
Social Media Accounts . . . . . . . . . . . 25
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3.  Kellogg brothers, Doctor John Harvey Kellogg and Willie Keith Kellogg (WK)
were the salesmen to the family broom company.
 Dr. John Harvey believed that poor diet was at the root of many health
problems. He served his patients only whole grains, fruits, vegetables and
other natural foods.
 John Harvey, fascinated by the idea of healthy diets, experimented and
created new foods, without using the normal taste enhancers of sugar, salt
or spices.
 The brothers experimented with wheat batter aiming to develop their own
improved version.
 A batch of batter was forgotten and went stale. Rather than throw it away,
the brothers rolled the dried-out batter into sheets. It did not form sheets
but broke into small flakes. They baked the flakes to see what they tasted
like.
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4.  It was a light, healthy and somewhat tasty perfect way for patients to start
the day.
 They named it Granose Flakes and started feeding the patients.
 In 1898, WK developed a similar process, this time making flakes out of corn.
 By 1906, WK left the hospital taking his recipe for flaked corn with him and
in February 1906, set up the Battle Creek Toasted Corn Flakes Company.
 WK piled a third of his working capital into advertising and within a year he
was selling 2,900 cases a day at a dollar a box profit
 WK planned a larger and fireproof factory. He had struck out on his own just
in time. By now, another 41 past patients of the sanatorium, and various
businessmen set up breakfast cereal companies in Battle Creek.
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5.  First-mover Advantage
 Taking the lead in converting people to the idea of eating cereal for
breakfast. His timing was to some extent fortuitous. Pasteurized milk was
becoming widely available in the major cities, so half his job was being
done for him.
 He gave away product samples, employing samplers to go door-to-door
to demonstrate the ease and convenience of switching on a cereal
breakfast.
 Determined to be the biggest and most impactful advertiser in the
cereal business, he constructed 106 by 80 foot-tall billboard in Times
Square requiring 80 tons of steelwork.
 This boasted as the world’s largest single advertising sign. It was one of
the most effective, increasing his sales into fifteen-fold.
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6.  Product Quality
 WK son, John Leonard Kellogg, came up with the idea they trademarked
as Waxtite.
 Encasing the cereal boxes within an envelope of waxed paper that will
sealed the contents from the outside air, adding many months of
freshness.
 This would be one of over 200 patents.
 They developed a malting process that added more flavour to the
Cornflakes.
 Winning Shelf Space
 WK built consumer demand by aggressive advertising. He sent his
salesmen into every shop, with an incentives to stock his product.
 WK’s product had a much longer shelf life than his competitors, it would
be a brave shopkeeper to refuse to find room for Kellogg’s on his
shelves. 6

7.  Barriers to Entry
 WK realized a category truth that would continue to this day: breakfast
cereals are very responsive to new news, developing a stream of new
products became a company priority.
 Kellogg’s Toasted Rice Flakes appeared in 1909, soon followed by
Kellogg’s Toasted Wheat Biscuit, Kellogg’s Krumbles, Kellogg’s 40%
Bran Flakes and Kellogg’s All-Bran in 1916.
 In 1910, WK invented an idea of putting collectibles inside the boxes to
increase the pester-power component of brand loyalty, including a set
of moving pictures booklets.
 While WK was building a cereal empire, John Harvey continued to run
the sanatorium along with the Sanitas Food Company.
 In 1910, he launched the first in a decade-long series of legal battles to
prevent WK.
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8.  He sell items like Rice Flakes and Flake Biscuits under the Kellogg name
which he claimed with prior usage but loss on a trial against WK.
 By the end of the World War I, experienced his first ever-annual loss.
WK factory, with fifteen acres of floor space, was capable of producing
30,000 cases of cereal a day, fed by orders from 400 salesmen working
out of twenty regional offices nationwide.
 In 1921, the company launched single servings of its brands, selling
them to hospitals, hotels, rail companies and the like. So captive
audiences could sample this new kind of breakfast.
 In 1923, John Leonard, much more scientifically minded than his father,
came up with the idea of hiring a dietician.
 His first recruit was a dietician at Columbia University, Mary Barber, who
established the Home Economics department
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9.  In 1924, she issued a leaflet entitled, Food Selection Chart, which was
soon approved in Washington to be mailed to home economics
teachers across the nation.
 In 1925, came the company’s first brand targeted at a particular
segment, Kellogg’s Pep, which was aimed at athletes.
 Two years later, a blockbuster followed: Kellogg’s Rice Krispies.
 Its famous Snap! Crackle! Pop! slogan soon appeared in the soon-to-be-
famous ditty:
“Listen to the fairy song of health, the merry chorus sung by
Kellogg’s Rice Krispies. As they merrily snap, crackle and pop in a
bowl of milk. If you’ve never heard food talking, now is your
chance.”
 Leo Burnett-designed cartoon characters appeared in 1930s.
 WK appointed a succession of non-family members to the President’s
role but gave them no room to manage.
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10.  During the Great Depression, he heard that the company was scaling
back both on advertising and sampling.
 So WK intervened to restore the cuts and double the advertising
budget. The result was that the company continued to grow through
even the hardest of economic times.
 By the end of the depression, the Kellogg Company was making nearly
$6 million a year profit.
 The Kellogg Company realised that success came from desire for its products
amongst children plus parental approval.
 Marketing efforts targeted at kids reached new heights when commercial
radio became available nationally. Kel-logg’s sponsored the first network
radio programme aimed directly at children, followed by a series of others.
 They also sponsored Admiral Richard E. Byrd’s South Pole expedition
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11.  Along with the World War II, its famous home economist, Isabel I. Barber,
taking up the post of Food Consultant to the Quartermaster General.
 There she created all the menus for the army, including rations for combat
troops. So Kellogg’s produced K-rations throughout the war.
 In 1940, the Home Economics department came up with the recipe for
Kellogg’s Rice Krispies Marshmallow Treats.
 Kellogg’s Raisin Bran was launched as the company underwent a major
modernisation of its factories, updating its Battle Creek facilities and
building several factories across the country.
 The company diversified into dog food in 1941 with the launch of Gro-Pup, a
dog food so replete with added vitamins and minerals that no meat was
required: well worth wagging for, as the ads proclaimed.
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12.  By 1948, sales had reached $100 million a year. Its factories were modern
and highly automated giving Kellogg doubled profit margin.
 They enjoyed a dominant share of the market and well set to benefit from
two factors that would power its business for the next twenty years: post-war
baby boom and the arrival of television advertising.
 Leo Burnett advertising agency did them proud, developing characters such
as Tony the Tiger for the new brand Kellogg’s Frosted Flakes, soon joined by
Kellogg’s Honey Smacks, Kellogg’s Sugar Corn Pops, Kellogg’s Sugar All-
Stars and Kellogg’s Cocoa Crispies.
 Helped by other additions to the range, such as Kellogg’s Special K in 1955,
the company managed to double its sales within a decade.
 They reached the magic $200 million mark in 1957, the same year another
Leo Burnett creation, Cornelius the Rooster, made debut on the Kellogg’s
Cornflakes box
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13.  It was a golden era for the company.
 Kellogg’s Concentrate and Kellogg’s OKs were added in 1959.
 OKs’ failure turned out to be a blessing in disguise. The equipment installed
to make OKs would be utilized during the 1960s.
 This will help making the more enduring Kellogg’s Froot Loops, Kellogg’s
Apple Jacks and Kellogg’s Puffa Puffa Rice. Kellogg’s Bran Buds and
Kellogg’s Frosted Mini Wheats also joined the line-up.
 In 1964, they developed their version of Country Squares, under the name of
Kellogg’s Pop-Tarts.
 Kellogg’s Pop-Tarts eventually become the company’s single largest brand,
growing in volume for every year of its existence.
 Kellogg was no longer a cereal company; it was a breakfast/snack company.
 It was accentuated in 1969 when the Kellogg bought Salada Foods, a tea
and coffee company.
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14.  In 1914, it has opened its first factory in Canada
 In 1924, Kellogg opened a factory in Sydney
 In 1938, built the largest factory to date in Manchester, England
 Opened its sixth factory outside Johannesburg in South Africa.
 In 1951, the next such regional production hub was built in Mexico
 In the early 1960s, it aimed at first-mover status in as many developed
markets as possible: opening up in Ireland, Sweden, the Netherlands,
Denmark, New Zealand, Norway, Venezuela, Columbia, Brazil, Switzerland,
Japan, Finland, Spain and Italy.
 In 1963, the company opened an international technical center in Europe,
which lessened the already slim dependence of the European businesses on
Head Office.
 In 1973, the UK business was so successful that the company opened a
second factory
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15.  In 1993, it gained a first Eastern Europe foothold, in Latvia.
 A year later, a small factory was opened in India, followed by one in
Guangzhou, China and then in Thailand.
 Kellogg now had 29 factories operating in nineteen countries, and supplying
nearly 160 countries.
 All Kellogg’s international expansion, its core markets in UK/Ireland, Mexico,
Canada and Australia/New Zealand accounted for over 80% of its non-US
sales.
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16.  In 1906, the modern company took shape the day the first box of cereal
rolled off WK’s production line. Kellogg started as a cereal company and by
the late 1960s was the largest one in the world by some considerable
margin.
 It had expanded overseas while the others had stayed local.
 The company had diversified in the past, on an ingredient-processing basis,
into dog and other animal feeds, without much success.
 Pop-Tarts had shown that the company could compete outside of the cereal
aisle.
 In 1970 it ventured into the freezer section, and bought Fearn International,
Inc., specifically so it could acquire an up-and-coming line in Fearn’s
portfolio, Eggo waffles.
 In 1980s, baby boomers ate less cereal as they grew into adulthood. There
were fewer kids entering the market as birth rate contracting.
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17.  The company massively ramped up its R&D budget to $20 million and was
soon churning out three varieties of Kellogg’s Nutri-Grain cereal.
 By 1988, consumers aged 25–49 were eating 26% more breakfast cereal than
they had been doing five years previously.
 Kellogg was launching twice as many new brands than it had in 1983.
 The marketing budget had tripled within five years, up to an eye-watering
$865 million.
 A nostalgia advertising campaign got dads to introduce this brand to their
children. Many of the adult brands introduced sold at much higher prices
per box than the range of children’s cereals.
 In 1983, Kellogg had a shrinking target market and steadily lost market share
from 43% in 1972 to 36.7%
 In 1998, the company cut its workforce by 25% and entering the functional
food category mostly outside of the cereal aisle.
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18.  In 1998, the company embarked on a new direction, cutting its workforce by
25% and entering the functional food category mostly outside of the cereal
aisle.
 Kellogg continued its pivot towards more adult-friendly brands, with the
launches of Kellogg’s Raisin Bran Crunch and Kellogg’s Special K Red Berries.
 In 2000 and 2001, two very important acquisitions were made, Kashi Foods
and Keebler Company
 The Cheez-It brand had doubled its volume in five years by the time Kellogg
took ownership.
 Kellogg had a thriving, but geographically limited, international profile.
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19. Two core divisions: Kellogg North America and Kellogg International
Subdivided as follows:
 Kellogg North America
 North American Retail Cereal
 North American Retail Snacks
 Frozen and Specialty Channels
 Kellogg International
 Kellogg Europe (headquartered in the UK)
 Kellogg Latin America (headquartered in Mexico)
 Kellogg Asia Pacific (a broad region also including Africa and the Middle
East, run out of Australia)
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20. 2004
 They ventured into the fruit snacks category.
 Introduced reduced-sugar versions of Kellogg’s Frosted Flakes and Kellogg’s
Froot Loops
 Rolled out the highly successful ‘Lose up to 6 lb in 2 weeks’ promotion on
Kellogg’s Special K
2005
 Introduced new flavour, Cinnamon Roll Pop-Tarts
 Special K bars posted a double-digit increase and the range was extended
with the introduction of Oatmeal Raisin All-Bran Bars.
 The natural and now organic Kashi brand grew by double digits to reach a
2% share of the overall cereal market
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21. 2006
 Introduced Go-Tarts as an on-the-go version of Pop-Tarts
 Extended the Kashi cereal brand into frozen entrées
 Introduced organic versions of Rice Krispies, Raisin Bran and Frosted Mini-
Wheats
2007
 Rice Krispies brand was kick-started with new lines and a ‘Childhood is
calling’ themed advertising campaign.
 The Kashi brand was extended further into waffles and pizza
2008
 Made three significant acquisitions in its Asia-Pacific region
 Had 32,000 employees and 59 manufacturing facilities in nineteen countries,
servicing 180 countries
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22. 2009
 The company was getting into digital marketing
 Reduction of the ‘bad’ ingredients such as sugar, sodium and fat, together
with increasing the ‘good’ ingredient
 Fibre was added to Froot Loops and Apple Jacks.
2010
 New CEO – John A. Bryant
 Experienced major supply issues on waffles and had to institute a product
recall
2011
 Growth with reported sales up by 6.5% and internal sales up by 4.5%
2012
 Sales of Thick and Fluffy Eggo waffles and Morningstar Farms went up
 Announced partnership with Singapore-based Wilmar International
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23.  The concern is that cereal DNA may be a part of the corporate chromosome
that doesn’t deliver growth in the 21st century. However, it is management’s
job to make its strengths relevant to changing circumstances.
 Kellogg is more of a multi-regional than global company.
 The relatively high level of autonomy still enjoyed today in the overseas
companies has proven to be a significant strength
 It requires the right combination of local autonomy to develop new ideas in
different environments, and a not-invented-here management culture that
makes managers receptive and willing to proudly copy, that only Kellogg
possess.
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24.  The fact is that, even today, the vast bulk of its cereals business comes from
markets it developed before and soon after the Second World War.
 It had first-mover advantage, sometimes for decades before serious
competition turned up.
 Kellogg has not been particularly adept at either fending off competition,
either from CPW or private label, or opening up new markets beyond its
core.
 Its snacks business (excluding Pringles), while an impressive achievement,
has been built largely through happenstance and in morphing its cereal
brand equities into snack bars. Pop-Tarts has not been followed up by
anything remotely as successful, and there are only a finite number of strong
cereal brand equities that can transition into snacks.
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25. Website/s: www.kelloggs.com/en_US/home.html
www.kelloggcompany/com/en_US/home/html
LinkedIn: www.linkedin.com/company/kellogg-company?trk
Facebook: www.facebook.com/kelloggspoptarts
Twitter: twitter.com/Kelloggs_US
Instagram: instagram.com/poptarts411
YouTube: www.youtube.com/user/kelloggcompany?
Tumblr: kelloggsfrootloops.tumblr.com/
Pinterest: www.pinterest.com/frootloopsusa/
Blog Site: www.kelloggs.com/en_US/champions-of-great-starts.html
Flickr: www.flickr.com/photos/kelloggs_press_office/
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