The early struggles of Kellogg Co.'s ambitious Tiger Power cereal exposes the hubris behind the company's bid to take on General Mills' toddler titan.
Six months after Tiger Power hit shelves, the same Midwest retail executive who prophesied that it would "be a big hit" now guesses it might not be on the shelf at yearend if sales don't improve dramatically.
According to Information Resources Inc. data culled from food, drug and mass outlets excluding Wal-Mart, Tiger Power sales totaled a mere $3.4 million for the period ended May 15, compared to the $550 million taken in by mega-brand Cheerios over the last year. Tiger Power sales, one executive close to Kellogg said, are "far less than expected."
While Kellogg was quick to price promote the cereal right out of the gate, its traditional media spending for January through March, according to TNS Media Intelligence, totaled only $7.6 million for Tiger Power. That compares to General Mills' $21 million outlay for Cheerios, a surprising contrast for a brand that-despite the backing of Kellogg's well-known Tony the Tiger icon-is a virtual unknown.
"I don't know if the consumer knows what Tiger Power is, whereas everybody knows what a Cheerio is," said one grocery retail executive, who said Tiger Power's sales when not discounted have been very slow, with Cheerios doing roughly 10 times its new rival's business.
Kellogg is expected to exponentially increase its TV advertising budget in coming weeks to try to build awareness and steal share from the inimitable O's, using ads from Publicis Groupe's Leo Burnett, Chicago, that feature Tony touting the calcium, fiber and protein-rich cereal as "Gr-r-reat to grow!" for the toddler set. A Kellogg spokesperson did not return calls.
But Steven Addis, CEO of brand-strategy firm Addis, said that unseating the iconic Cheerios brand will be hard, especially because Kellogg decided to use Tony the Tiger to hawk the nutrition-oriented brand. "While Tony is indeed a known equity-which means the cup is half full from day one-equity is not always an asset, since in this case he brings with him the baggage of Frosted Flakes, a possible liability in communicating about a healthy cereal."
Mr. Addis recently helped Kellogg develop branding for its natural Kashi brand's first kids' cereal, Mighty Bites, which he suggested is a much better sell to parents in part because of the inherent health message. "Health needs to be somewhat self-evident and the reason to fall in love is what you need to focus on," Mr. Addis said.
According to yet another disappointed retail executive, Kellogg hasn't given consumers that reason. "I don't think they've made a case for people to switch from Cheerios," he said. "I'd call it Tiger Pooper."
Even if the brand turns out to be a "pooper," however, it isn't expected to affect Kellogg's leading position in cereal with its portfolio totaling roughly $2 billion. Neuberger Berman analyst Bill Leach noted that Kellogg is doing far better than General Mills (the secondary player with sales of $1.8 billion), with cereal volumes for Mills' brands falling a precipitous 9% last quarter, while Kellogg's volume stayed flat.