Kellogg's - Struggling To Expand

this video is brought to you by audible start listening with a 30-day trial in your first audiobook plus two audible originals are free just go to audible.com slash company man or text company man - 500 500 I promise I'll talk about the Kellogg's Company in a minute but I want to start off by stating a controversial opinion concerning pop-tarts I know but I'm sticking my neck out here and stating it that I prefer the unfrosted ones now before you get upset let me defend myself it's not that I hate frosting it's more complicated the unfrosted ones have a thicker crust and are just different overall they actually have more calories than the frosted ones and a representative has confirmed that they're different in several ways including the overall composition of the food including weight break ability toast stability here's what I'm getting at when you're at the store choosing your pop-tarts it seems like the two versions are identical except for the frosting and who's possibly going to choose non frosted in that situation especially when they have more calories and fewer flavors for those reasons I theorized that unfrosted pop-tarts have been overlooked I bet many of you have never even tried them or if you have but you thought that they were the same thing and it didn't have an open mind going in so I'm proposing a challenge if you think you may be one of those people that hasn't given them a fair chance go down to the store and pick up one box of each ideally the same flavor I recommend strawberry and when you get home perform a side-by-side taste test it should cost about four or five dollars I have no affiliation with Kellogg's this isn't a big scam to sell pop-tarts I just want to know so once you do that and go over to this channels community tab vote on your preference and we can just see the results that's it and just in case it wasn't clear I'm talking about Kellogg's pop-tarts not toast them pop ups or some other off-brand in fact I'm of the opinion for us that or not that the one dollar you spend on upgrading to the real thing is quite possibly the best way you could spend that one dollar alright enough of that let's get to the actual company I know that a whole first thing was about Pop Tarts but I think it's safe to say we all identify Kellogg's as Uriel company yeah cornflakes frosted flakes Froot Loops rice krispies so many more they usually take up a good portion of that cereal aisle but then they also own a bunch of brands that aren't cereals some of those would be well pop-tarts Morningstar farms and nutrigrain Pringles cheez-its eggo is a big one that a go logo those cheese look an awful lot like the G's in the Kellogg logo in fact that Kellogg's logo is based on the signature of will Keith Kellogg himself we used to put it on boxes of toasted corn flakes to separate them from the competition which was a real issue back then though I guess that's why it's on there now so for today I'd like to talk about what this company has been up to where they came from and how they've come to sell all these different brands this is an origin story unlike anything you've ever heard it concerns two men named Kellogg they were brothers one was will Keith Kellogg I just mentioned him with the signature and the other was a doctor named John Harvey Kellogg that's a lot of names and I fear it's already getting confusing so I'll simply call him will and the doctor the doctor was quite a character a bit of an odd fellow he was a member of the seventh-day Adventist Church got involved with the founders early on and as a result he had some strong yet unconventional beliefs as an adult he ran this place called the sanitarium in Battle Creek Michigan it was sort of a wellness spot I think is how we would describe it today here's an ad fort from 1916 you go there on vacation and get all these health treatments to eat healthy food it was owned by the church and ran based on their principles quite honestly it looks like a wild place which could really sidetrack the video so instead I recommend you look up some of the crazy stuff that was going on for now I'll just say if you somehow find yourself a hundred years in the past I wouldn't necessarily recommend going there though the facility and the doctor were both respected and popular at the time one of these principles was this program dr. Kellogg called biologic living which didn't allow for most foods meats coffee alcohol and most dairy products were not allowed it was essentially a lot of bland vegetables and grains that's the diet that he followed and it was promoted at the facility since it was so restrictive and let's face it unpleasant he was experiment with different ways to alter the foods and make them taste better I guess the story goes that he and his brother were in the basement of the facility working on some granola one night when they let some of this wheat berry sit for too long in it dried out it led to them accidentally creating what I guess you would call a wheat flake which they then sold in connection with the sanitarium I don't think it was too tasty plus the strict rules didn't allow it to be eaten with sugar meanwhile will Kellogg was inspired by it and kept experimenting until he created a corn flake he saw huge potential for it so in 1906 he left his brother and the facility to start his own cereal company called Battle Creek toasted corn flake company which was a very specific non catchy name so in 1909 he renamed it to Kellogg toasted corn flake company in a 1922 finally changed it to Kellogg it was a huge success from the beginning of mostly because it was just a great product okay I don't know if corn flakes are actually all that healthier or not but in the early 1900's everyone thought that they were and they were easy you can now have a healthy breakfast without cooking all morning which was unheard of then when new competitors emerged that were doing a good job in imitating the product will spent a ridiculous amount of money on advertising to promote brand awareness and just make his stand out from all the others that goes along with him putting a signature on the box when you think about it all these cereals especially back then weren't all that different from each others so marketing had a huge impact on what the customer would buy obviously over the years they came out with countless other cereals crumbles was the second cereal that they ever offered back in 1912 which was actually really popular for a while but the reason you've likely never heard of it is because they stopped making it back in the 1970s following that was bran flakes in 1915 and all bran the following year rice krispies started in 1927 some others here and there but then a big wave of them came in the 1950s that's when the baby boom was going on there were all these little kids everywhere which was a perfect opportunity to introduce some sugared cereals I'm talking about frosted flakes corn pops Cocoa Krispies the following decade brought Apple Jacks and Froot Loops I guess more of a circular cereal period for them plus the Scott's TV was the new big thing and the perfect medium to have Tony the Tiger telling the kids that his cereal was the end result was they were now selling so much cereal to children oh and speaking of mascots that rooster from the cornflakes box do you know what his name is Cornelius I just thought that was great by the 1960s they had over 250 million dollars in annual sales and a 40% share in the cereal market from the very beginning through the end of the 1960s this was almost exclusively a cereal company they did have a line of dog food and some other ventures over the years but almost all of their sales for the past 60 plus years had been from cereal in the 1970s they made a plan to expand into other areas nothing too crazy but after so much time ingest the cereal business this was a big decision part of the motivation for it was well remember those baby boomer kids back in the 1950s it was now the 1970s and they were older not buying as much sugared cereals so they expanded by acquiring all these other food companies they bought a tea company one that sold soups a pie company and a lot of other stuff throughout that decade and in the 1990s they were refocusing on cereal and getting rid of a lot of that and then a few years later they were back at it that's when they made the largest acquisition in the company's history when they bought Keebler for 3.9 billion dollars in cash plus they assumed over half a million in their debt making the deal worth 4.4 billion it of course included all the cookies and crackers branded with that Keebler name in addition to stuff that we wouldn't even associate with them such as Famous Amos for the cookies and cheese it for the crackers the motivation for it was set to be a means to diversify a little bit away from breakfast cereals since General Mills was taking some of their market share and the competition was forcing prices to go down Keebler also had this attractive distribution system in place where the employees would deliver straight to the stores rather than going through a wholesaler they figured that they could utilize that for some of their products well in April of 2019 they sold it or at least the cookie end of it they held on to the crackers their CEO says this divestiture is yet another action we have taken to reshape and focus our portfolio which will lead to reduced complexity more targeted investment in bed growth they bought it to diversify and the 19 years later sold it to refocus here's what I make of all this Kellogg's is a cereal company but the cereal business isn't as easy as it used to be in the 1970s when all those baby boomers grew up and they had trouble selling sugared cereals they diversified into teas and pies and everything else but it didn't work out so they went back to cereal then in the early 2000s General Mills started providing some tough competition so they diversified into cookies and crackers and some other stuff now more recently cereal in general isn't doing very well everyone's eating breakfast on the go and more health-conscious neither one is very good for Froot Loops it's been going on for a while now weak cereal sales way on Kellogg's business Kellogg's shares slip as cereal sales slowed again looking at the last 5 years of sales of their us morning food segment which is mostly cereals it's gone down every year the core of their business looks to be on its way out or at least is dropping fast to respond to this their new plan is to refocus and do what they can to save cereal I mean their Kellogg's and cereal needs attention in addition to these salty snacks they held on to cheese it's held on to the Keebler crackers and as of 2012 are the owners of Pringles it's hard to summarize but right now Kellogg's is focused on their cereals and salty snacks let me know in the comments is that a good focus because I say it is it's not that I have a lot of faith in the future of cereal but I'm not going to say that Kellogg's should stop selling cereal that'd be crazy that's what we all know them for that's where they have the most brand power and it's what they do best they have over a hundred years of history with it so this plan of refocusing on it along with maintaining some of these other more promising brands sounds like a way to go that's my overview of what's been going on over at Kellogg from the beginning until now obviously there's so much more we can talk about just the mascots alone my goodness but enough of that more importantly don't forget about that pop-tart challenge test them both and come back and tell me what you thought I don't expect unfrosted to win overall but I do expect it to win some of you over I'd like to hear what you have to say today's sponsor is audible and if you like this video I have the perfect recommendation it's called Kellogg it's the battling brothers of Battle Creek it goes in-depth way more about the Kellogg brothers and the early days of the business to really interesting stuff there was an extended legal battle over who could use the Kellogg name and a lot going on with that sanitarium if you're interested in this audiobook or audiobooks in general I recommend audible because audible members can choose three titles every month that's one audiobook and two audible originals which you can't hear anywhere else members get a credit good for any audiobook you credits roll over to the next month you can exchange it no questions asked and by the way if they have the largest selection of audiobooks on the planet right now to get started with this go to audible.com slash company man or simply text company man - 500 500 thank you for watching [Music]

Channel: Company Man

Views: 473,404

Keywords: Kellogg's, Cereal, Corn Flakes, Rice Krispies, Tony the Tiger, Mascots, Business

Id: JsN4gCpTsno

Length: 12min 5sec (725 seconds)

Published: Wed Sep 11 2019