Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Kellogg Company (K), General Mills, Inc. (GIS), ConAgra Foods, Inc. (CAG): Yummy Returns from 3 Packaged Food Leaders

Kellogg Company (NYSE:K), General Mills, Inc. (NYSE:GIS), and ConAgra Foods, Inc. (NYSE:CAG) are market leaders in the processed and packaged food industry, based on market capitalization.

Company Market capitalization (in $ billion)
General Mills 37.4
Kellogg 24.0
ConAgra 14.9

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?

Can Commodity ETFs Hedge Your Everyday Expenses?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:

Year 2012 2013 2014 2015
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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.