Kellogg Co. is planning significant marketing changes for Special K, shifting away from the brand's longtime weight-loss messaging to talk more about nutrition. The Michigan-based marketer is also restructuring its Kashi brand, including relocating it to California in a move to make it more autonomous.
Executives outlined the new strategies on an earnings call today after reporting yet another quarter of sluggish results for the marketer's critical morning-foods business. Kellogg and other cereal marketers have been hurt by shifting morning-eating trends that include growing competition from other categories including yogurt. Kellogg's U.S. morning-foods division posted a net sales decline of 4.9% in the second quarter; the company's overall sales fell less than 1% to $3.7 billion.
Special K, in particular, has struggled. Dollar sales of the main variety fell by 22.3% in the 52 weeks ending June 15 to $175 million, according to IRI. Special K with red berries dropped by 13.2% to $134 million. The steep declines compare to a 4% sales drop in the overall $9 billion ready-to-eat cereal category, according to IRI.
Special K, whose agency is Leo Burnett, Chicago, has for years run weight-loss-oriented campaigns that often break in the fall and winter in advance of the traditional diet season and have included taglines such as "What will you gain when you lose?"
But Kellogg Co. CEO John Bryant suggested on Thursday that such messaging no longer resonates with consumers. He referenced weakness in other categories such as diet sodas and reduced-calorie frozen meals. "I think consumers are changing their views on weight management from 'reduce calories' to 'nutritious foods'," he said. Special K can "absolutely meet that criteria," he added. "It's a very nutrient-dense food form. But we haven't been communicating it that way. So we are increasing our communication more down that path as opposed to reduce calories."
Kellogg declined to reveal specific campaign elements. A spokeswoman said new ads would break later this year and in early 2015.
The marketer is also making significant changes on its Kashi brand, which has struggled. David Denholm, a former Kellogg employee who left to become president-chief operating officer at Chobani in 2013, will return to become CEO of Kashi, a newly created position that will also include oversight of Kellogg's Bear Naked brand. The Kashi division will relocate from Kellogg's corporate headquarters in Battle Creek, Mich., back to La Jolla, Ca., where it was based as recently as 2013. Kellogg acquired the Kashi brand in 2000.
Chobani, in a statement, said: "We wish David well and thank him for his contributions at Chobani. While we search for his replacement, we are absorbing his responsibilities internally."
