Kellogg s Program Overview July 31, 2013
Kellogg s Program Overview That s Kellogg s Cereal Why Kellogg s Merchandising Support New Value Pack Snacks Products and applications Programs 2
Really That s Kellogg s? Cereal Leading Cereals from the #1 Breakfast Company in the World! Snacks Leading Snacks from the #2 Snack Company in the World! Veggie #1 and #2 Leading Veggie Protein Brands! Hot Breakfast Leading Solutions from the #1 Waffle Brand! 3
Complimentary breakfast is a guest expectation. The key is how to differentiate Nearly 3 of 4 (74 %) lodging operators offer complimentary breakfast to their guests, up from 59% in 2008. In 2008, only 29% of luxury hotels reported offering a complimentary breakfast. *Technomic Lodging F&B Report April 2013 4
Cereal is core offering for lodging guests 82% of patrons consume cereal at least some of the time when they visit a breakfast buffet at a hotel 16% Consume cereal EVERY time they visit 25% Consume cereal most of the time 41% Consume cereal some of the time 5 Source: Maximizing Cereal Opportunities Study, Dataessentials, November 2012
Kellogg s is a preferred Food & Beverage Parther Why is that? Kellogg is the #1 RTEC manufacturer in all retail grocery outlets 2 and foodservice 3 Kellogg drives category, brand and packaging innovation with category management executed across channels and segments Kellogg offers a diverse portfolio of leading kid and adult brands that meet consumer needs: Kellogg s has 9 out of the top 17 brand franchises in retail grocery (GM has 4) Special K is Kellogg s leading Brand Franchise. Kellogg s Raisin Bran outsells nearest competitor 14:1 Frosted Flakes is Kellogg s #2 RTEC brand franchise and the #1 kid cereal brand overall. 1) NPD Eating Patterns 2012, 2) Retail Share: Nielsen Total US XAOC Current 52 Weeks Ending 3/09/13, FS Share: PE Top National Brand Franchises in Retail Grocery Outlets 2 Sales (MM) 1. General Mills Cheerios $1,197 2. Kellogg s Special K $570 3. Kellogg s Frosted Flakes $429 4. Post Honey Bunches of Oats $417 5. Kellogg s Frosted Mini-Wheats $355 6. General Mills Cinnamon Toast Crunch $314 7. Kellogg s Raisin Bran $259 8. General Mills Lucky Charms $257 9. Quaker Cap n Crunch $250 10. Kellogg s Froot Loops $245 11. General Mills Chex $242 12. Kellogg s Rice Krispies $224 13. Quaker Life $184 14. Post Pebbles $171 15. Kashi GoLEAN $136 16. Kellogg s Apple Jacks $136 17. Kellogg s Corn Flakes $129 FS RTEC Tracker, 12 Months Ending 6/2012 (ex. Overseas and Domestic Military) 6 6
Kellogg s Consumer Cereal Brand Strength vs. GM Retail Grocery Manufacturer $ Market Share Malt-O-Meal 7% rivate Label 10% Ralcorp 10% Quaker 6% All Other Combined 2% General Mills 31% Kellogg s 34% Top 15 Kellogg s Retail Grocery Cereal Brand SKUs GM Comparable Brand SKUs Relative Size Brands Sales (MM) Brands Sales (MM) K vs. GM 1 $405.7 Frosted Corn Flakes $0 GM FCF Not Original Sold in Retail 2 $224.5 Trix $82.7 K Outsells Original Almost 3:1 3 $192.0 Fiber One Shredded Wheats $3.9 K Outsells More Original Than 49:1 4 Red Berries $155.3 GM Comparable N/A $0 GM N/A Foodservice Manufacturer $ Market Share All Other Combined 5% Malt-O-Meal 5% Kellogg s 48% General Mills 43% Retail Share: Nielsen Total US XAOC Current 52 Weeks Ending 3/09/13 FS Share: PE FS RTEC Tracker, 12 Months Ending 6/2012 (ex. Overseas and Domestic Military) 5 Original $153.0 Total Raisin Bran $10.9 K Outsells More Than 14:1 6 $143.1 Rice Crunchins $0 GM RC Not Sold Original in Retail 7 $131.1 Apple Cheerios $24.7 K Outsells More Original than 5:1 8 $129.1 Country Corn Flakes $0 GM CF Not Sold Original in Retail 9 Original $101.6 GM Comparable N/A $0 GM N/A 10 $97.2 Kix $47.8 K Outsells More Original than 2:1 11 Crunch $91.9 Fiber One Raisin Bran Cluster $14.3 K Outsells More than 6:1 12 Fruit & $70.8 GM Comparable N/A $0 GM N/A Yogurt 13 Vanilla $66.3 GM Comparable N/A $0 GM N/A Almond 14 $59.3 GM Comparable N/A $0 GM N/A Cocoa 15 Chocolate $47.6 GM Comparable N/A $0 GM N/A
Available cereal formats. Best Western Program Allowances: $2.00/cs. $2.00/cs. $1.75/cs. $2.00/cs. $2.00/cs.
So what s the right mix of Cereals? TURF Analysis Overview 9 TURF= Total Unduplicated Reach and Frequency What is it? TURF data shows how operators may create optimal mixes of cereal types and formats to reach the greatest number of consumers in a given segment (e.g., lodging) Said another way, TURF aims to show us the best possible set in order to ensure the greatest number of people likes at least one of the products offered. How did we determine the TURF? 700 Consumers were surveyed nationwide by Dataessentials Products in the study included Kellogg s brands as well as competitive cereal brands (e.g., General Mills). Natural groupings were identified to understand how consumers consciously or subconsciously may group cold cereals By running a TURF on this factor analysis, we understand how clusters of cold cereals impact consumer reach
Optimized Cereal Mix: Product Recommendations TURF RECOMMENDATIONS Lodging Hotel Breakfast Buffet 2 SET 1 Kellogg's Raisin Bran 59% reach 2 Kellogg's Frosted Flakes 4 SET 3 GM Cinnamon Toast Crunch 73% reach 4 Kashi Heart to Heart 8 SET 5 Kellogg's Corn Flakes 84% reach 6 Kellogg's Special K Red Berries 7 Kellogg's Rice Krispies Kellogg's Frosted Mini Wheats 8 Bite Size Recommended format for Buffet: Bowls or Bulk Dispensers Can substitute Kellogg's Raisin Bran Crunch for the same reach Can substitute Kellogg's Apple Jacks or Kellogg's Froot Loops for the same reach Replace with Kellogg s Corn Flakes and reach drops less than 2% Can substitute Kashi Go Lean Crunch for the same reach Can substitute Kellogg's Cocoa Krispies for the same reach Can substitute Kellogg's Low Fat Granola or Kellogg's Krave for the same reach Can substitute Kellogg's Corn Pops or Kellogg's Special K for the same reach 10 Source: Maximizing Cereal Opportunities Study, Dataessentials, November 2012
Merchandising Support Best Western franchisees can get at least two free dispensers when they purchase through approved foodservice distributors (i.e. Sysco, USFS, GFS) Proof of purchase may be required. To order, franchisees call 1-877-551-5777. There are two options available (see below). Both require names of the cereals to be used at the time of ordering. If you encounter any issues with this process, call Eric Prosperi at 630-532-8243. 11
So what do you do if someone is not using Kellogg s? 1. Make sure they know how important the Kellogg s brand is to your guests. 2. Make sure they are aware of free merchandising that goes with Kellogg s products. 3. If price is a barrier Tell them about the new Value Cereal Pack 12
Kellogg s Foodservice Value Pack : Brands they Trust at an Everyday Low Price Variety Price Per Ounce (at list) Kellogg s New Foodservice Pack Malt-O-Meal Bulk General Mills Bulk Corn Flakes $.105 $.105 $.189 Rice Krispies $.146 $.146 $.193 Raisin Bran $.133 $.133 $.191 Kellogg s New Foodservice Pack Case Price $35.28 $49.08 $50.06 13
New Foodservice Value Package: Case Pack 38000-93768 Kellogg's Corn Flakes 24 oz. Foodservice Pack 14 24-oz. boxes per case 38000-93769 Kellogg's Rice Krispies 24 oz. Foodservice Pack 14 24-oz. boxes per case 38000-93770 Kellogg's Raisin Bran 23.5 oz. Foodservice Pack 16 23.5-oz. boxes per case 14
Snacking 15
Snacking is playing a much larger role with consumers now than 2-3 years ago Nearly half of consumers (48%) snack at least twice a day, up 25% in 2010. Technomic Snacking Occasion Trend Report 2012 Snacking represents 1 in 5 meal occasions NPD National Eating Trends 2012 Frequency is up as consumers snacking more often during the day In particular, snacking during the morning nearly doubles in growth Source: SymphonyIRIGroup : State of the Snack Industry 2012 Source: SymphonyIRIGroup : State of the Snack Industry 2012 16
In Lodging, snacking presents all-day opportunity across F&B service areas % of F&B Revenue at Hotels in service areas by daypart Lobby stores is the only service area with double-digit usage across all dayparts Breakfast is the most important occasion that guests purchase via lobby stores * Technomic Lodging F&B Report April 2012 Service Area Time of Day Breakfast Lunch PM Snack Dinner Late Night FSR 53% 14% 2% 29% 2% LSR 69 8 5 18 1 Lobby Cart or Kiosk 70 16 6 5 3 Lobby Stores/Pantry 46 15 11 19 10 Banquets and Catering 42 24 4 29 1 Bars and Lounges* 18 13 7 50 13 Pool Bars 12 39 17 24 9 Room Service 44 8 5 39 5 Preferred Guest Dining/Lounge Dedicated Breakfast Area 43 15 11 30 1 98 0 0 1 0 Mini-Bars 53 4 3 27 13 Employee Feeding 34 43 2 12 9 Other Service 36 12 7 35 12 17
Healthier snacks are growing faster than indulgent! Healthier snack categories have grown faster (in volume) vs indulgent snack categories Source: SymphonyIRIGroup : State of the Snack Industry 2012
Proven Tastes and Brands For Over 100 Years! #2! With Pringles, Kellogg s is the #2 snack company in the world! 1 #1 toaster pastry in America 1 #1 marshmallow treat in America 1 #1 cheese snack cracker in America 1 #1 cereal bar brand in the wholesome category 1 #1 #1 all natural chocolate chip brand in cookie in Vend 3 America 1 #1 energy bar in C-stores 4 #2 cereal bar brand in the wholesome category 1 Source: 1 Nielsen Total US FDMx, 52 weeks ending 4/21/12; 2 Product Evaluations Tracking Study, FY 2011; 3 Brandshare FY 2011; 4 Nielsen 1/15/2013 Convenience Scantrack, 52 weeks ending 4/21/12 19
Snacking is an important & more frequent occasion for consumers Everyone snacks and most consumers snack >3 times per day 1 often while away from home Since 2009, afternoon snack occasions have had the greatest increase in occurrence 1 Foodservice operators sell >$8B annually of salty snacks alone 2 Of which 60% are estimated to be single serve or pre-pack Yet your salty snack sales potential may be greater Your operation could be missing up to 20% of sales today 3 2012 XAOC Salty Snacks Dollar Consumption Brand Rankings 4 #1 #2 #3 #4 #5 #6 #7 #8 1) 2012 IRI State of the Snack Industry SNAXPO, Consumer Daily Snack Frequency; 2) 2011 Westport Consulting Group; 3) Nielsen Total US XAOC (all outlets combined) latest 52wks ending 6/30/12 based on $ consumption as % of top 10 salty set items; 4) Nielsen Total US XAOC (all outlets combined) latest 52wks ending 6/30/12 11/1/2012 20
Best Western Program Best Western Program Allowances: Bars $0.75/cs. (Kashi, Nutri-Grain, Special K, Rice Krispies Treats) Cookies $0.75/cs. (Keebler, Austin, Soft Batch, Murray Sugar Free, Famous Amos) Toaster Pastries $0.75/cs. (Pop-Tarts) Chips $0.75/cs. (Pringles, Special K, Kashi) Other Items Cones $0.75/cs. (Keebler, Eat-It-All, Colosso) Crackers $0.75/cs. (Keebler, Sunshine, Carrs, Cheez-IT, Zesta, Austin) 21
Despite Evolution, Many Americans Still Skip Breakfast! Over 30MM Americans skip breakfast 1 with 1 in 5 18-34 year olds skipping Convenience & Portability remain top obstacles to breakfast consumption 3 20% 15% % of Skipped Breakfast Opportunities 2 19% 16% 14% What are enablers to ensure that you and your family eats breakfast? 3 Buy convenient, easy to prep items 46% 36% 10% 5% 6% 10% 7% 5% Have lots of breakfast options available Buy portable/on-the-go items Get up early to prep breakfast 24% 26% 21% 21% 17% 40% 0% Kids 6-12 Teens 13-17 Young Adult 18-34 Adult 35-44 Adult 45-54 Adult 55-64 Adult 65+ Prep breakfast night before Other mention 6% 7% 4% 8% Source: 1) The NPD Group, Morning MealScape 2011; 2) The NPD Group/National Eating Trends YE Feb 2013; 3) 2011 Kellogg Survey, Breakfast in America Mom (kids) Adult (self) 22
Drinkable Breakfast Insight A nutritious and filling breakfast helps give families the energy to get through the busy morning. However, they often have a hard time waking up and don t have time to sit down to eat breakfast every day. Offering Breakfast shakes in re-sealable bottles for convenient on-the-go nutrition, providing the energy consumers need to get up and keep going throughout the morning. 3 great tasting flavors: Milk Chocolate, Vanilla, and Strawberry. 10g protein, 5g fiber, 18g sugar, 100% DV vitamin C & E. Benefit Great tasting, energizing breakfast for a great start to the day. Portable and convenient on-the-go bottle. Kellogg s the leader in breakfast. 23
Special K Nourish Introducing Special K Nourish Hot Cereal Cups Differentiation vs. Instant or Bulk On-trend hot cereal from a powerful brand with 95% Special K brand awareness 1 Strong, differentiated multi-grain blend featuring super grains and abundant additives for taste and texture Includes a WHOLE GRAIN BLEND, including whole grain oats, whole grain barley, whole grain wheat, and whole grain quinoa Unique packaging; top cap highlights toppings and allows for personalization Improved convenience of a cup vs. bulk oatmeal or individual oatmeal pouches Powerful nutrition: good source of protein, excellence source of fiber 24
Special K Sandwiches Research identified a key gap within consumer needs. Weight Managers do not want to compromise taste for nutrition and are dissatisfied with options currently offered Taste that is light in taste and texture Real Gourmet Cheese, Whole Eggs, Multigrain Flatbread, Real Sausage, Vegetables Balanced/Wholesome breakfast that is low in calories Brand Imagery that is Premium & High Quality 25
Introducing Kashi Hummus Crisps!
Questions? 27