Kellogg is preparing to have larger scale

Nine months in the post of President of Kellogg in Brazil, the Colombian Gustavo Rincon commands the biggest change in the country. The leader in breakfast cereals, the company has been losing market to Nestlé launched two months ago and cereal bars. The expansion of the portfolio is the main focus of the company in Brazil, where is 52 years. The goal, until 2022, is to increase the local operation in five times. Gain range is the challenge for the next five years.
The Brazilian market is still relatively small within the group. Kellogg, based in the United States, grossed $ 14.2 billion last year, and the Brazil does not reach $ 500 million. But the country entered the investment focus of the matrix, that in 2012 has invested in expanding capacity utilisation and on the modernization of the factory of São Paulo, the only that Kellogg has in Brazil. The company produces in 18 countries and sells in 180.
Last year, Kellogg bought the Pringles potato, Procter Gamble &, for $ 2.7 billion and defined as the priority category of snack foods (or snacks). The idea is to sell "snacks"-crisp Pack of cereal-bar and be less dependent on morning cereal box breakfast. These products are the gateway to other retail outlets than the supermarket, such as pharmacies and bars.
Rincon worked for 13 years at the company. Passed by Mexico's main market, Kellogg in Latin America, and Venezuela. In his first interview to a Brazilian newspaper, he says that the challenge in the country is to have larger scale. "We are working to change that in the next five years." Until 2022 the company wants to increase its size in Brazil in five times.
In the last 12 months the Kellogg prepared the launch of cereal bars, its boldest step in Brazil. Manufacturing is outsourced. The product arrived at retail in April this year, even shy and restricted to the South and Southeast regions. The distribution will grow from July, says marketing director Tatiana Brammer.
In addition to regional brands, such as Nutritional, Nutry, and Trio, Trio foods, Kellogg will fight with multinational companies that also sell cereal bars-starting with its biggest rival, Nestlé, who works the product a few years ago; and the American General Mills (sells the Nature Valley since 2006) and PepsiCo, which launched earlier this year the Quaker line. "It is a market that does not have a leader so marked and has more competitors", says Rincon.
The Kellogg leads with the brand Cornflakes cereal matinaisl-market has 40% stake, in a category that was worth $ 400 million in 2012 in Brazil. The leadership has for decades, but the company saw Nestlé win space-14% of the Brazilian market in 2006, reached 17% in 2010, according to Euromonitor. "Nestlé won space, was getting close. We move to recover the market ", says Rincon. "Retrieve participation was what was missing and recovered, between the end of last year and the beginning of 2013."
The sector grew by over 10% per year in value since 2005, and now accompanies the pace of deceleration of the Brazilian economy, says Rincon. In 2013, the manufacturers see sales grow "a digit," he says, adding that Kellogg grows above the market.
"For many companies 2012 was a difficult year", says Rincon. Inflation in the price of commodities, primarily corn, wheat, sugar and paper (for packaging) has forced manufacturers to reduce operational costs and invest in innovation so as not to lose profitability, adds the Executive. The Brazilian operation of Kellogg has developed a specific programme with local suppliers to ensure purchases and reduce costs with the volatility of the price of the raw material and the dollar.
The major barrier for the sector is to compete with alternative products-and the range is broad. Cereals compete with several categories of supermarkets, cookies to breads and chocolates. The challenge for industry is to persuade consumers to invest in the cereal box, and the cost for a box of cereal is much higher than that of a package of cookies.
In the USA-the world's largest market, where it makes two-thirds of sales-the Kellogg also produces frozen food. There are no plans to bring this product to Brazil.