|Company||Market capitalization (in $ billion)|
These world leaders are crunching up the competition through acquisitions, improvements in major segments and growth in various regions. Thanks to the convenience of packaged food products, they are preferred by busy working individuals and families trying to maintain an easy lifestyle. This creates a rise in demand for the industry’s products. How are these leaders implementing the above strategies to remain popular among consumers?
Growth from acquisition and major segment
Last year, Kellogg Company (NYSE:K) acquired the world’s second largest savory snack company, Pringles, in order to expand its snack capabilities on a global level. Kellogg Company (NYSE:K) acquired Pringles for $2.7 billion and became the world’s second largest savory snack food maker, after PepsiCo, Inc. (NYSE:PEP). In the first quarter, Kellogg Company (NYSE:K)’s sales increased 12% year-over-year, primarily due to the acquisition. Kellogg Company (NYSE:K) plans to grow in emerging markets through the acquisition since two thirds of Pringles’ share of the revenue came from overseas. The savory market in emerging countries is expected to reach $20.62 billion in 2016, with a CAGR of 7.1% from 2011 to 2016. Despite the risk factor presented by PepsiCo, Inc. (NYSE:PEP) in emerging markets, the company expects a cost synergy between $50 million and $75 million for this year.
In the first quarter of this year, Kellogg Company (NYSE:K)’s cereal segment’s sales were impacted by headwinds from adults, which were partially offset by growth in the children’s market. This segment saw year-over-year sales growth of 5% in the first quarter and segment growth with the launch of Special K hot cereal in late summer. Special K hot cereal is meant for people who are weight conscious. The obesity rate in the U.S. is 27.1%, up from last year’s 26.2%. This product will be popular among weight conscious adults. Last year, Kellogg modified its Special K website into a weight management site, where visitors could find and pick meal plans. This site now has more than two million members. With the huge traffic for Special K products, it will be the prime revenue generator for the company.
Betting on growth from its acquisition and new product, Kellogg hopes revenue will increase as follows:
|Revenue (in $ billion )||14.19||15.14||15.67||16.14|
Better future prospects from different geographical segments
General Mills, Inc. (NYSE:GIS)’s largest yogurt brand, Yoplait, currently holds 24% market share and the top position in the Greek yogurt category for the U.S. The Yoplait segment of the company saw U.S. sales decline 5% year-over-year in the fourth quarter of 2013. The decline is attributed to competitors like Chobani and Danone.
Going forward, a new yogurt is expected to launch in July 2013 and will attract more consumers, with multiple flavors such as strawberry, vanilla and coconut. This product will exceed $140 million in revenue in the first year of its retail sales. With the expected growth from this product, the company’s U.S. retail segment revenue is expected to increase:
|Fiscal Year||fourth-quarter 2013 (actual)||first-quarter 2014 (expected)||second-quarter 2014 (expected)|
|Revenue (in $ billion)||2.47||2.54||3.08|