Challenges in snacks and cereals to blame
Kellogg’s (K) North America business segment continued to slide in 4Q17. It reported total sales of $2.1 billion, a 1.7% decline on a YoY (year-over-year) basis. Persisting challenges in its snacks and cereals portfolio continue to hurt the segment’s top-line growth rate. List price adjustment, SKU (stock keeping unit) rationalization and low consumption of cereals dented the segment’s growth rate.
Kraft Heinz (KHC), General Mills (GIS), and J.M. Smucker (SJM), other major food manufacturers, have also been grappling with tepid demand in the United States, which in turn is affecting their sales growth rates.
North America sales by categories
Within North America, sales for the company’s U.S. Snacks division fell 5.8% during the reported quarter. List price adjustments due to the DSD (direct store delivery) transition and the elimination of less productive SKUs negatively impacted its sales.
Sales for the U.S. Morning Foods category declined 4.9% on a YoY basis, reflecting low consumption of cereals, primarily in the health and wellness segment. Tough YoY comparisons further remained a drag.
The company’s U.S. Specialty Channels improved 2.1% in 4Q17, driven by growth across all channels, including foodservice, vending, and convenience stores.
Its Other segment’s revenue rose 9.6%, reflecting momentum in its frozen foods brands, including Eggo and Morningstar Farms. Incremental sales from the RXBAR acquisition further supported the top-line growth rate. Its Canadian business also reported YoY growth, driven by market share gains for Pringles and cereals.