Published in Food/Agribusiness
Kellogg sales spike as consumers buy up packaged foods during pandemic COURTESY PHOTO: KELLOGG CO.

Kellogg sales spike as consumers buy up packaged foods during pandemic

BY Thursday, April 30, 2020 10:07am

BATTLE CREEK — Consumers stocking up on cereals, snacks and other foods during the global COVID-19 pandemic have led to “significantly” higher sales for Kellogg Co. 

The Battle Creek-based Kellogg (NYSE: K) said today that sales of packaged foods rose sharply in March as consumers bought up packaged foods in reaction to various stay-at-home mandates in the U.S. and global markets. 

For the company’s first quarter, which ended March 28, net sales rose by 8 percent on an organic basis, which takes into account Kellogg’s sale last year of its cookies, fruit snacks and ice cream cone business to Ferrero Group, as MiBiz previously reported.

Kellogg estimates that “slightly more than half of the growth in the first quarter was attributable to elevated consumer purchases during the global COVID-19 pandemic.”

In North America, net sales grew 6 percent on an organic basis, “driven by continuing momentum and consumers stocking up on packaged foods,” according to the company. Similarly, net sales on an organic basis were up 9 percent in Europe, 11 percent in Latin America, and 13 percent in the company’s Asia Pacific, Middle East and Africa operations. 

During the quarter, Kellogg increased production in response to higher consumer demand while focusing on fewer products. 

“I’m extremely proud of how our organization has risen to the challenge of keeping our employees safe, supplying much-needed food to the marketplace, and giving back to our communities in a time of need,” Kellogg Chairman and CEO Steve Cahillane said in a statement. 

Within its operations during the first quarter, Kellogg imposed travel and meeting restrictions as well as launched work-from-home policies to keep employees safe. The company also invested in “safety supplies and protocols in manufacturing facilities, distribution centers, and across the sales organization.” 

Kellogg also donated more than $10 million in cash and food to aid the global response to the pandemic. 

For the quarter, Kellogg generated $3.4 billion in net sales, down from $3.5 billion a year ago when it still operated the divested business. The company reported net income of $347 million, or $1.01 per diluted share, which compares to the same period a year ago when the company reported $282 million in net income, or 82 cents per diluted share. Reported operating profit also increased 20 percent to $459 million. 

Kellogg ended the quarter with more than $1 billion in cash on its balance sheet, a sharp increase from $397 million at the end of 2019. 

The company also affirmed its 2020 fiscal year guidance for organic net sales growth of 1-2 percent, barring any “significant supply chain or other market disruptions related to the pandemic or global economy.” 

Because of the trend of consumer stockpiling, Kellogg said it expects sales to skew toward the first half of the year.

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