Kellogg to stop using artificial products in cereals and snacks

Paul Norman, president of Kellogg North America, said the reformulation decision was part of broader efforts to revitalize the cereal category in the US. Excluding currency impact, Kellogg’s Asian, Latin American and European snack business posted sales growth, while the North American business benefited from improving trends, he added.

Koerten said breakfast cereal makers were under increasing pressure to develop artificial-free products, particularly due to a significant younger consumer base.

Kellogg reported second-quarter revenue on Tuesday that topped analysts’ expectations, but the 5.1 percent decline in sales was the seventh time in eight quarters that sales had fallen.

While its profits tumble, Kellogg is implementing Project K to trim its workforce and cut costs, but those savings haven’t taken effect yet.

Kellogg is the latest cereal company to curb artificial ingredients on account of health concerns and a growing preference in the U.S. for less-processed cereal options.

“We have introduced new packaging, and new communication to support all of this”, Mr. Norman said. “Flat is meaningful improvement from where we’ve been in the past”. Morning foods were down 2.3 percent, though the company said its cereal business was showing a positive trend; snacks were down 1.8 percent. Kellogg is targeting faster expansion in emerging markets, such as India and Brazil. “After a hard 2014, we continue to build momentum in 2015 and are on-track to achieve our long-term-growth targets for currency-neutral comparable sales and operating profit in 2016”.

In the quarter ended July 4, Kellogg’s sales of non-frozen breakfast foods in the U.S., like Corn Flakes and Pop- Tarts, dropped 2.3%, excluding one-time factors like acquisitions and currency exchange.

Overall, Kellogg reported a profit of $223 million, or 63 cents a share, down from $295 million, or 82 cents a share, a year earlier. Five analysts surveyed by Zacks expected $3.47 billion. Excluding certain costs, second-quarter earnings were 92 cents a share, in-line with the FactSet consensus of 92 cents.

Tess Stynes contributed to this article.