Kellogg Announces New Cereals and Cost-Cutting Strategy

Kellogg Co. (Battle Creek, MI) announced yesterday that it will introduce a new line of upscale cereals and cut costs in an attempt to revitalize sales and profits.

In early 1999 it will introduce Country Inn Specialties, a new line of cereals developed with the help of actual inns across the country. The premium cereals will be packaged in bags with photos and brief histories of the inns. The new line will not feature the Kellogg name on its packaging or be marketed as a Kellogg's product.

``Country Inn Specialities will create a unique niche by bringing the inns' reputation for hospitality and quality to the breakfast tables of consumers who enjoy everyday pampering,'' said company spokesman, Anthony Hebron, adding the new cereals would be more expensive, although he did not know how much.

In addition, the company will launch a new fortification program in many of its cereals, using the K-SENTIALS logo to identify cereals that contain nutrients it believes are essential for growth and development. The company will add calcium to some existing brands, including Cocoa Krispies, Froot Loops and Apple Jacks.

Kellogg expects to save over $150 million in 1999 from initiatives undertaken in 1998. The company also estimates capital spending to drop from about $400 million in 1998 to about $270 million in 1999 and about $250 million in 2000.

Kellogg is also raising prices in the United States for the first time since 1994. And earlier this month, the company said it is cutting 765 salaried and temporary jobs.

Kellogg said the measures are all necessary to invigorate the overall market, which has sagged as busy consumers turn to more convenience-oriented foods, such as bagels.

Kellogg's domestic market share is about 32%.