Kellogg’s is taking a big step by investing 450 million dollars to build an arm in Africa for a 50% stake in hopes of reaching a new target market. Many have asked the question: “Why is the company looking at this expansion in such a relatively diverse culture?”
Kellogg’s Logo.
The answer is simple: cereal is losing its appeal amongst North Americans. Sales and revenues for cereal-based companies in North America have decreased significantly. Consumers prefer less carbs, more protein, and hot breakfasts on the go due to busy schedules, fewer children, and increased health awareness.
Students in Africa learning about nutrition.
This expansion into other countries could mean increased revenue, lower costs, and fresh, new target audiences. Through my analysis, I believe that this is beneficial for the company. By targeting an audience of a different demographic, they can attract those in developing countries; who may appeal to the company’s sugary breakfast cereals. I do not believe that new revenue streams will be profitable in developed countries because the value of their brand is decreasing. I still wonder how far the company will go if they do not increase sales through this hefty bet and if the 450 million dollars is a gamble for the company.
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Sources:
- Baer, Drake. “Americans Have Changed the Way They Eat Breakfast – and It’s Killing Kellogg’s.” Business Insider. Business Insider, Inc, 03 Mar. 2015. Web. 01 Oct. 2015. <http://www.businessinsider.com/slow-death-of-kelloggs-cereal-2015-3>.
- “Creating Brands.” Kellogg Company. N.p., n.d. Web. 01 Oct. 2015. <http://www.kelloggcompany.com/en_US/brandportfolio.html>.
- Lutz, Ashley. “3 Reasons Americans Are Abandoning Cereal.” Business Insider. Business Insider, Inc, 26 Feb. 2015. Web. 01 Oct. 2015. <http://www.businessinsider.com/3-reasons-americans-are-abandoning-cereal-2015-2>.
- “Overview.” Kelloggs Corporate Responsibility. N.p., n.d. Web. 01 Oct. 2015. <http://crr.kelloggcompany.com/en_US/corporate-responsibility/overview/business-strategy.html>.
- Reuters. “Kellogg Is Making a $450 Million Bet to Build a New Empire.” Business Insider. Business Insider, Inc, 15 Sept. 2015. Web. 01 Oct. 2015. <http://www.businessinsider.com/r-kellogg-to-spend-450-million-to-expand-in-africa-2015-9>.
- “What Kelloggs’ Spread to Other African Countries Really Means – Ventures Africa.” Ventures Africa. N.p., 17 Sept. 2015. Web. 01 Oct. 2015. <http://venturesafrica.com/what-kelloggs-spread-to-other-african-countries-really-means/>
Photo Sources:
- “Aspire Africa.” Aspire Africa. N.p., n.d. Web. 01 Oct. 2015. <http://aspire-africa.com/2015/09/15/kellogg-company-and-tolaram-announce-new-long-term-partnership-to-significantly-expand-presence-in-africa/>.
- “How Are We Helping?” How Are We Helping? N.p., n.d. Web. 01 Oct. 2015. <http://chezmandn.weebly.com/how-are-we-helping.html>.