Kellogg Looks to Snack Its Way to Growth

Feb 21, 2002

Kellogg Co., the number-two U.S. cereal maker will introduce more products into its new distribution system, a move it says should stimulate sales growth this year, reports Reuters. Last March, it bought cookie and cracker maker Keebler for $4.2 billion, plus assumed debt, largely to gain access to Keebler’s propriety distribution system. Moving Kellogg’s snack-based products — Nutri-Grain cereal bars and Rice Krispies Treats — into Keebler’s routes has been a boon to sales, according to CEO Carlos Gutierrez. Under direct store delivery, or DSD, Kellogg bypasses third-party brokers that represent multiple brands and can maintain proprietary merchandising of their products in the dairy case or on grocers’ shelves.

Moderator Comment: Does it make sense for manufacturers
to be looking at DSD models in place of warehouse delivery?

You may have seen that Campbell Soup (RetailWire sponsor) announced that it was testing a joint venture with Interstate Bakeries. The test will allow Campbell to distribute its Pepperidge Farm baked goods in the West using Interstate Bakeries’ direct store delivery system.

Douglas Conant, chief executive, Campbell’s Soup has identified distribution as the major barrier to improving performance of the company’s baked goods line. “Pepperidge Farm is an incredibly powerful trademark. The challenge for us is to get it fully distributed.” [George
Anderson – Moderator

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