Kellogg to build power base in Thailand

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BANGKOK -- Thailand is one of only four countries in the world where Kellogg is not the market leader in breakfast cereals--a situation visiting CEO Arnold Langbo vowed to change this week. Langbo was in Thailand to open the company's 36th plant.

With Thailand as a production base for Southeast Asia, the company hopes Thailand and the Philippines will drop off the short list of countries where its rivals dominate, leaving only Chile and Portugal.

In Thailand, Kellogg is up against tough competition from Nestle, Ovaltine and Danone, all of whom have plants in the member states of the Association of Southeast Asian Nations, giving them tax and tariff privileges. Imported Kellogg's cereals are hit with a 60% tariff.

The new Kellogg plant levels the playing field. Annual per-capita consumption of ready-to-eat cereals in Thailand is only 17 grams, compared with 471 grams in Singapore--and 6 kilograms in the U.S. and Canada.

The ready-to-eat cereal market in Thailand is now worth about $16m, with about 70% accounted for by cereals aimed at children. The market is expected to grow by about 30% a year due to changing lifestyles, with Thai middle-class families looking for convenient and nutritious breakfasts. "Time pressures and increasing urbanization are causing people to change their breakfast foods," Peter Horekends, director for Asian operations at Kellogg Thailand Ltd, said at the plant opening.

Kellogg's agency in Thailand is Leo Burnett.

Copyright March 1997, Crain Communications Inc.

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