Grow Cereal and Expand Snacks

Our focused strategy concentrates on growing our Cereal business and expanding our Snacks business.

Since we developed this strategy in 2001, we have driven sustainable and dependable growth in a range of economic environments, and maintained Kellogg Company’s market position as either the number one or number two player in our key categories. Because our strategy is focused and consistent, our employees around the world understand it, know what they are expected to contribute, and hold themselves accountable for executing it successfully. Our business model supports these efforts by guiding us to take a long-term approach to our business that serves the best interests of our shareowners. This includes setting realistic growth targets that encourage long-term thinking, emphasizing innovation and keeping a sharp focus on cost savings. We believe that this is the right way to run our business, and we ensure consistent progress by regularly tracking our advances in each area.

Ready-to-eat cereal provides today’s busy consumers with a convenient, nutritious and great-tasting meal that can be eaten any time of the day or night and is a good value. We are focused on growing this business around the world, and in 2008, we realized internal sales growth of 3 percent in North America and 4 percent in our International business.

In North America, our Snacks business grew internal sales by 6 percent during 2008, outpacing our long-term target of low single-digit growth. A major catalyst for this growth was the continued success of our award-winning “direct-store-door” (DSD) delivery system, which expands our distribution reach, allows us to secure prime placement within stores, and enables us to influence consumer decisions at the point of sale. During the year, we increased our investments in our DSD system by adding more products, including fruit snacks and Kashi crackers, wholesome snacks and cookies. As a result, we posted double-digit increases in distribution and sales of these Kashi items. In International, the Snacks business remains our fastest growing segment, and in 2008, it grew by over 9 percent, fueled by rising sales of European snack bars, including Special K and Nutri-Grain Soft Oaties.