History & Origin . . . . . . . . . . . . . . . . . . . 3

Early Evolution . . . . . . . . . . . . . . . . . . . .5

Global Expansion . . . . . . . . . . . . . . . . 14

Modern Business . . . . . . . . . . . . . . . . . 16

Company Structure . . . . . . . . . . . . . . 19

Recent Efforts . . . . . . . . . . . . . . . . . . . .20

Company DNA . . . . . . . . . . . . . . . . . . 23

Summary . . . . . . . . . . . . . . . . . . . . . . . 24

Social Media Accounts . . . . . . . . . . . 25

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Kellogg brothers, Doctor John Harvey Kellogg and Willie Keith

Kellogg (WK) were the salesmen to the family broom company.

Dr. John Harvey believed that poor diet was at the root of many

health problems. He served his patients only whole grains, fruits,

vegetables and other natural foods.

John Harvey, fascinated by the idea of healthy diets, experimented

and created new foods, without using the normal taste enhancers

of sugar, salt or spices.

The brothers experimented with wheat batter aiming to develop

their own improved version.

A batch of batter was forgotten and went stale. Rather than throw

it away, the brothers rolled the dried-out batter into sheets. It did

not form sheets but broke into small flakes. They baked the flakes

to see what they tasted like.

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It was a light, healthy and somewhat tasty perfect way for patients

to start the day.

They named it Granose Flakes and started feeding the patients.

In 1898, WK developed a similar process, this time making flakes

out of corn.

By 1906, WK left the hospital taking his recipe for flaked corn with

him and in February 1906, set up the Battle Creek Toasted Corn

Flakes Company.

WK piled a third of his working capital into advertising and within a

year he was selling 2,900 cases a day at a dollar a box profit

WK planned a larger and fireproof factory. He had struck out on his

own just in time. By now, another 41 past patients of the

sanatorium, and various businessmen set up breakfast cereal

companies in Battle Creek.

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First-mover Advantage

Taking the lead in converting people to the idea of eating

cereal for breakfast. His timing was to some extent fortuitous.

Pasteurized milk was becoming widely available in the major

cities, so half his job was being done for him.

He gave away product samples, employing samplers to go

door-to-door to demonstrate the ease and convenience of

switching on a cereal breakfast.

Determined to be the biggest and most impactful advertiser in

the cereal business, he constructed 106 by 80 foot-tall

billboard in Times Square requiring 80 tons of steelwork.

This boasted as the world’s largest single advertising sign. It

was one of the most effective, increasing his sales into fifteen-

fold. 5

Product Quality

WK son, John Leonard Kellogg, came up with the idea they

trademarked as Waxtite.

Encasing the cereal boxes within an envelope of waxed paper

that will sealed the contents from the outside air, adding many

months of freshness.

This would be one of over 200 patents.

They developed a malting process that added more flavour to

the Cornflakes.

Winning Shelf Space

WK built consumer demand by aggressive advertising. He sent

his salesmen into every shop, with an incentives to stock his

product.

WK’s product had a much longer shelf life than his

competitors, it would be a brave shopkeeper to refuse to find

room for Kellogg’s on his shelves.

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Barriers to Entry

WK realized a category truth that would continue to this day:

breakfast cereals are very responsive to new news, developing

a stream of new products became a company priority.

Kellogg’s Toasted Rice Flakes appeared in 1909, soon followed

by Kellogg’s Toasted Wheat Biscuit, Kellogg’s Krumbles,

Kellogg’s 40% Bran Flakes and Kellogg’s All-Bran in 1916.

In 1910, WK invented an idea of putting collectibles inside the

boxes to increase the pester-power component of brand

loyalty, including a set of moving pictures booklets.

While WK was building a cereal empire, John Harvey continued

to run the sanatorium along with the Sanitas Food Company.

In 1910, he launched the first in a decade-long series of legal

battles to prevent WK.

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He sell items like Rice Flakes and Flake Biscuits under the

Kellogg name which he claimed with prior usage but loss on a

trial against WK.

By the end of the World War I, experienced his first ever-

annual loss. WK factory, with fifteen acres of floor space, was

capable of producing 30,000 cases of cereal a day, fed by

orders from 400 salesmen working out of twenty regional

offices nationwide.

In 1921, the company launched single servings of its brands,

selling them to hospitals, hotels, rail companies and the like.

So captive audiences could sample this new kind of breakfast.

In 1923, John Leonard, much more scientifically minded than

his father, came up with the idea of hiring a dietician.

His first recruit was a dietician at Columbia University, Mary

Barber, who established the Home Economics department 8

In 1924, she issued a leaflet entitled, Food Selection Chart,

which was soon approved in Washington to be mailed to home

economics teachers across the nation.

In 1925, came the company’s first brand targeted at a

particular segment, Kellogg’s Pep, which was aimed at

athletes.

Two years later, a blockbuster followed: Kellogg’s Rice Krispies.

Its famous Snap! Crackle! Pop! slogan soon appeared in the

soon-to-be-famous ditty: “Listen to the fairy song of health, the merry chorus sung by Kellogg’s Rice Krispies. As they merrily snap, crackle and pop in a bowl of milk. If you’ve never heard food talking, now is your chance.”

Leo Burnett-designed cartoon characters appeared in 1930s.

WK appointed a succession of non-family members to the

President’s role but gave them no room to manage. 9

During the Great Depression, he heard that the company was

scaling back both on advertising and sampling.

So WK intervened to restore the cuts and double the

advertising budget. The result was that the company

continued to grow through even the hardest of economic

times.

By the end of the depression, the Kellogg Company was

making nearly $6 million a year profit.

The Kellogg Company realised that success came from desire for its

products amongst children plus parental approval.

Marketing efforts targeted at kids reached new heights when

commercial radio became available nationally. Kel-logg’s sponsored

the first network radio programme aimed directly at children,

followed by a series of others.

They also sponsored Admiral Richard E. Byrd’s South Pole

expedition

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Along with the World War II, its famous home economist, Isabel I.

Barber, taking up the post of Food Consultant to the

Quartermaster General.

There she created all the menus for the army, including rations for

combat troops. So Kellogg’s produced K-rations throughout the

war.

In 1940, the Home Economics department came up with the recipe

for Kellogg’s Rice Krispies Marshmallow Treats.

Kellogg’s Raisin Bran was launched as the company underwent a

major modernisation of its factories, updating its Battle Creek

facilities and building several factories across the country.

The company diversified into dog food in 1941 with the launch of

Gro-Pup, a dog food so replete with added vitamins and minerals

that no meat was required: well worth wagging for, as the ads

proclaimed. 11

By 1948, sales had reached $100 million a year. Its factories were

modern and highly automated giving Kellogg doubled profit

margin.

They enjoyed a dominant share of the market and well set to

benefit from two factors that would power its business for the next

twenty years: post-war baby boom and the arrival of television

advertising.

Leo Burnett advertising agency did them proud, developing

characters such as Tony the Tiger for the new brand Kellogg’s

Frosted Flakes, soon joined by Kellogg’s Honey Smacks, Kellogg’s

Sugar Corn Pops, Kellogg’s Sugar All-Stars and Kellogg’s Cocoa

Crispies.

Helped by other additions to the range, such as Kellogg’s Special K

in 1955, the company managed to double its sales within a

decade.

They reached the magic $200 million mark in 1957, the same year

another Leo Burnett creation, Cornelius the Rooster, made debut

on the Kellogg’s Cornflakes box

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It was a golden era for the company.

Kellogg’s Concentrate and Kellogg’s OKs were added in 1959.

OKs’ failure turned out to be a blessing in disguise. The equipment

installed to make OKs would be utilized during the 1960s.

This will help making the more enduring Kellogg’s Froot Loops,

Kellogg’s Apple Jacks and Kellogg’s Puffa Puffa Rice. Kellogg’s Bran

Buds and Kellogg’s Frosted Mini Wheats also joined the line-up.

In 1964, they developed their version of Country Squares, under

the name of Kellogg’s Pop-Tarts.

Kellogg’s Pop-Tarts eventually become the company’s single

largest brand, growing in volume for every year of its existence.

Kellogg was no longer a cereal company; it was a breakfast/snack

company.

It was accentuated in 1969 when the Kellogg bought Salada Foods,

a tea and coffee company. 13

In 1914, it has opened its first factory in Canada

In 1924, Kellogg opened a factory in Sydney

In 1938, built the largest factory to date in Manchester, England

Opened its sixth factory outside Johannesburg in South Africa.

In 1951, the next such regional production hub was built in Mexico

In the early 1960s, it aimed at first-mover status in as many

developed markets as possible: opening up in Ireland, Sweden, the

Netherlands, Denmark, New Zealand, Norway, Venezuela,

Columbia, Brazil, Switzerland, Japan, Finland, Spain and Italy.

In 1963, the company opened an international technical center in

Europe, which lessened the already slim dependence of the

European businesses on Head Office.

In 1973, the UK business was so successful that the company

opened a second factory

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In 1993, it gained a first Eastern Europe foothold, in Latvia.

A year later, a small factory was opened in India, followed by one

in Guangzhou, China and then in Thailand.

Kellogg now had 29 factories operating in nineteen countries, and

supplying nearly 160 countries.

All Kellogg’s international expansion, its core markets in

UK/Ireland, Mexico, Canada and Australia/New Zealand accounted

for over 80% of its non-US sales.

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In 1906, the modern company took shape the day the first box of

cereal rolled off WK’s production line. Kellogg started as a cereal

company and by the late 1960s was the largest one in the world

by some considerable margin.

It had expanded overseas while the others had stayed local.

The company had diversified in the past, on an ingredient-

processing basis, into dog and other animal feeds, without much

success.

Pop-Tarts had shown that the company could compete outside of

the cereal aisle.

In 1970 it ventured into the freezer section, and bought Fearn

International, Inc., specifically so it could acquire an up-and-

coming line in Fearn’s portfolio, Eggo waffles.

In 1980s, baby boomers ate less cereal as they grew into

adulthood. There were fewer kids entering the market as birth rate

contracting.

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The company massively ramped up its R&D budget to $20 million

and was soon churning out three varieties of Kellogg’s Nutri-Grain

cereal.

By 1988, consumers aged 25–49 were eating 26% more breakfast

cereal than they had been doing five years previously.

Kellogg was launching twice as many new brands than it had in

1983.

The marketing budget had tripled within five years, up to an eye-

watering $865 million.

A nostalgia advertising campaign got dads to introduce this brand

to their children. Many of the adult brands introduced sold at much

higher prices per box than the range of children’s cereals.

In 1983, Kellogg had a shrinking target market and steadily lost

market share from 43% in 1972 to 36.7%

In 1998, the company cut its workforce by 25% and entering the

functional food category mostly outside of the cereal aisle.

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In 1998, the company embarked on a new direction, cutting its

workforce by 25% and entering the functional food category

mostly outside of the cereal aisle.

Kellogg continued its pivot towards more adult-friendly brands,

with the launches of Kellogg’s Raisin Bran Crunch and Kellogg’s

Special K Red Berries.

In 2000 and 2001, two very important acquisitions were made,

Kashi Foods and Keebler Company

The Cheez-It brand had doubled its volume in five years by the

time Kellogg took ownership.

Kellogg had a thriving, but geographically limited, international

profile.

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Two core divisions: Kellogg North America and Kellogg International

Subdivided as follows:

Kellogg North America

North American Retail Cereal

North American Retail Snacks

Frozen and Specialty Channels

Kellogg International

Kellogg Europe (headquartered in the UK)

Kellogg Latin America (headquartered in Mexico)

Kellogg Asia Pacific (a broad region also including Africa and the

Middle East, run out of Australia)

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2004

They ventured into the fruit snacks category.

Introduced reduced-sugar versions of Kellogg’s Frosted Flakes and

Kellogg’s Froot Loops

Rolled out the highly successful ‘Lose up to 6 lb in 2 weeks’

promotion on Kellogg’s Special K

2005

Introduced new flavour, Cinnamon Roll Pop-Tarts

Special K bars posted a double-digit increase and the range was

extended with the introduction of Oatmeal Raisin All-Bran Bars.

The natural and now organic Kashi brand grew by double digits to

reach a 2% share of the overall cereal market

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2006

Introduced Go-Tarts as an on-the-go version of Pop-Tarts

Extended the Kashi cereal brand into frozen entrées

Introduced organic versions of Rice Krispies, Raisin Bran and

Frosted Mini-Wheats

2007

Rice Krispies brand was kick-started with new lines and a

‘Childhood is calling’ themed advertising campaign.

The Kashi brand was extended further into waffles and pizza

2008

Made three significant acquisitions in its Asia-Pacific region

Had 32,000 employees and 59 manufacturing facilities in nineteen

countries, servicing 180 countries21

2009

The company was getting into digital marketing

Reduction of the ‘bad’ ingredients such as sugar, sodium and fat,

together with increasing the ‘good’ ingredient

Fibre was added to Froot Loops and Apple Jacks.

2010

New CEO – John A. Bryant

Experienced major supply issues on waffles and had to institute a

product recall

2011

Growth with reported sales up by 6.5% and internal sales up by

4.5%

2012

Sales of Thick and Fluffy Eggo waffles and Morningstar Farms went

up

Announced partnership with Singapore-based Wilmar International

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The concern is that cereal DNA may be a part of the corporate

chromosome that doesn’t deliver growth in the 21st century.

However, it is management’s job to make its strengths relevant to

changing circumstances.

Kellogg is more of a multi-regional than global company.

The relatively high level of autonomy still enjoyed today in the

overseas companies has proven to be a significant strength

It requires the right combination of local autonomy to develop new

ideas in different environments, and a not-invented-here

management culture that makes managers receptive and willing

to proudly copy, that only Kellogg possess.

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The fact is that, even today, the vast bulk of its cereals business

comes from markets it developed before and soon after the

Second World War.

It had first-mover advantage, sometimes for decades before

serious competition turned up.

Kellogg has not been particularly adept at either fending off

competition, either from CPW or private label, or opening up new

markets beyond its core.

Its snacks business (excluding Pringles), while an impressive

achievement, has been built largely through happenstance and in

morphing its cereal brand equities into snack bars. Pop-Tarts has

not been followed up by anything remotely as successful, and

there are only a finite number of strong cereal brand equities that

can transition into snacks.

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www.kelloggcompany/com/en_US/home/html

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