Kellogg expects earnings drop

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Kellogg Co. CEO Carlos Gutierrez projected a 23% drop in earnings for the food company next year, during a meeting with analysts today. The decline is due in large part to Battle Creek, Mich.-based Kellogg's recent acquisition of Keebler Foods Co. but is furthered by Kellogg's plan to step up its investment in marketing with an emphasis on brand-building advertising. Kellogg spent only $300 million on advertising last year, quitting ad efforts altogether in the fourth quarter, vs. spending of $500 million in 1995, according to Banc of America Securities analyst Bill Leach. The marketing increase is part of an overall growth plan that includes leveraging Keebler's direct-store delivery program and expanding to new distribution channels with Kellogg's newly diversified portfolio of brands. Leo Burnett USA, Chicago, and J. Walter Thompson USA, New York, handle Kellogg.

Copyright November 2000, Crain Communications Inc.

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