Business Studies

 

The food industry is especially vulnerable to changes in the socio-cultural habits of people. One such company is Kellogg, which produces traditional breakfast products (cereeal), both on account of changing trends and by not making changes (unlike General Foods)
Please watch this video on how Kellogg is in trouble (http://www.bloomberg.com/news/videos/2015-02-27/will-kellogg-s-cereal-sales-ever-return-to-normal-) . Indeed, Kellogg sales have really been very stagnant and profits have been declining over the past few years (https://www.google.com/finance?q=NYSE%3AK&fstype=ii&ei=7xAIVbDUMoiH9AaLooGoBw ) . How should Kellogg address this. Give two concrete suggestions.

(Here is a brief written review of the video):

“Kellogg cereal is in trouble. As the company continues to spend more than $1 billion a year on advertising, the sales of 19 of Kellogg’s top 25 cereals eroded last year. U.S. morning-foods net sales fell 8 percent in the fourth quarter of 2014. It was the division’s seventh quarterly decline in a row.

For almost a century, Kellogg defined the American breakfast complete with mascots like Tony the Tiger and a trio of elves. By the 1970s, Kellogg’s share of the U.S. cereal market had reached 45 percent. But the American breakfast experience has changed. Americans are having fewer children, both parents often work, and they eat breakfast on the go rather than at the breakfast table. While some have replaced cereal with granola bars, Greek yogurt and fast-food breakfast sandwiches, those who do eat at home favor preparing oatmeal, frying eggs, toasting frozen waffles, or making French toast and pancakes. As Americans become more health-conscious, they are avoiding processed foods, carbohydrates and GMOs with an increasing preference for gluten-free cereal.

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Kellogg’s U.S. snacks division sales have also declined, placing more pressure on Kellogg to develop cereals that will overcome these cultural shifts. Kellogg is hoping to slow the decline with a gluten-free Special K, efforts to restore Kashi’s credibility with health-food shoppers, and highlighting Kellogg’s 15 GMO-free cereals. Some Wall Street analysts say cereal sales may never fully recover.”