KELLOGG REPORTS BRISK CEREAL SALES IN INDIA

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BOMBAY-Kellogg Co. says its newly introduced corn, wheat and basmati flakes breakfast cereals are selling faster than hotcakes in this urban area. And the U.S. cereal giant expects annual nationwide sales to hit $26 million in three years, in a country where the market is just $2 million now.

Kellogg's marketing concentrates on convincing Indians to take time for breakfast and consume a lighter, more nutritious morning meal.

Although advertising didn't kick off until a week after the products hit the shelves Sept. 17, such ready enthusiasm caused Kellogg to up its original sales projections.

The long-term prospects have convinced Kellogg to invest $30 million in the business. Kellogg's All Bran, Bran Flakes and Raisin Bran will be introduced as well, with all cereals available nationwide by next year.

The marketer faces a more daunting challenge in changing breakfast habits in non-Western-ized small cities and rural areas. According to a market penetration study by the Indian Market Research Bureau, while countrywide penetration of cookies is currently at 88% and potato chips 64%, corn flakes and hot cereal were a minuscule 3%. An earlier study said 22% of Indians now skip breakfast.

To convince consumers to switch to a lighter, more nutritious diet, Kellogg is introducing rice flakes using basmati, a premium aromatic rice.

The whole line is being backed with a $450,000 multimedia campaign through December, with three 30-second TV spots featuring a family around the breakfast table. The commercials use a common Kellogg theme for the Asia/Pacific, addressing overeating as well as the ill effects of a bread and butter diet and skipping breakfast.

The campaign "does leave behind a suggestion that current fried breakfasts are not the best things you could provide your family to begin the day," said Anil Bhatia, senior VP-general manager at Hindustan Thompson Associates.

Kellogg also plans to sponsor a TV special featuring a panel of nutritionists, dietitians and physicians on the government-run Doordarshan Network.

The company is already sponsoring "Kellogg's Breakfast Show," a morning talk show that runs daily on radio. The first guest celebrity in early October was Sushmita Sen, Miss Universe 1994.

Kellogg is also sponsoring two message boards on the main Bombay commuter thoroughfare featuring healthful advice from medical experts.

Informative and copy-heavy ads are being placed in English and local-language newspapers, and women's and health magazines.

"To me, the Indian market is similar to the Mexican market because the Mexicans also used to consume a hot, savory breakfast," said Damindra Dias, Kellogg India's managing director. "We are saying, `Take the right food. Don't fill yourself with fat the first thing in the morning.'*"

It took Kellogg an arduous 20 years to crack the Mexican market, and more than six years to convince the French to pass up croissants and the Japanese to lay down their chopsticks in favor of cereal in milk.

Problems arise "where there are very entrenched ethnic [breakfast] habits," Ms. Dias said.

Kellogg claims its patience and the general influence of Western media will win over the 75 million urban upper middle-class Indians who are initially being targeted.

Kellogg's Corn Flakes and Wheat Flakes are priced at exactly double that of other brands in the market. The most popular brand is Mohan Meakin's New Life Corn Flakes.

The brand has been selling for decades in larger cities such as Bombay, but its sales are tiny compared with players in more developed cereal markets.

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