Snap, crackle and highly popular
|Noel Hegarty gives Michael Cullen some insights into the Kellogg's story in Ireland|
When it comes to having an appetite for ready to eat cereals (RTEC), Irish people down about eight kilos per head a year, which for the stat crunchers puts us at the top of the cereal consumption league worldwide. Only the UK, Australia, Mexico, the US and Canada come close to matching Ireland. That's a good start for Noel Hegarty.
As marketing director of the Kellogg Company of Ireland (KCI), Hegarty, 37, a native of Derry who commutes daily from Co Down to Santry, in north Dublin, statistics like that are assuring. But being numero uno – and Kellogg's has a 61.5 per cent share of Ireland's RTEC market – imposes its own pressure, demanding stamina and focus.
Why does a country like Ireland have such a fondness for munching away on 30 million bowls of Corn Flakes each year? Hegarty says one reason would be the size of the traditional Irish family. Gathering around the breakfast table as a unit was more a habit here than it would tend have been overseas and to a large extent, the custom holds.
Hegarty says the availability of fresh Irish milk would be part of the joy of eating cereal. As Kellogg's has always been at pains to point out, Kellogg's do not do own label. So unless the logo is on the pack… Kellogg's are not into hot cereals and despite the growth in porridge sales, seasonality does not play a big part in cereal consumption generally.
“If you look at why people buy porridge and how it's marketed,” Hegarty said, “it's targeted at a niche market. We don't sell hot breakfast cereals and so we're not into that business at all. We segment our activity into the kids market, the wheat biscuit section, the corn section and sales of muesli – but muesli to a much lesser degree.”
Corn Flakes leads in terms of value. Sales of Rice Krispies, one of the oldest Kellogg's brands, has grown year-on-year in recent years and Special K is in big demand from adults. Given the brand's advertising, one would expect Special K to be popular among women but, as Hegarty says, once a box of cereal is in the home, others tend to indulge.
“If you look at trends nowadays,” Hegarty said, “people are looking for simpler, less processed foods. Take Rice Krispies, made from a single grain of rice. We've gone out and talked about that and the message has resonated with Irish consumers.” Not surprisingly, the interview moves on to the debate about obesity and nutrition.
As with many food marketers who have come under fire for promoting products where the emphasis has been on sugar and salt to stimulate consumer taste buds at the expense of nutrition, Kellogg's has taken a hard look at its cereals and reacted by lowering such ingredients and telling consumers what their 'improved' cereals were about.
“The obesity problem has been well documented in Ireland,” Hegarty said. “It's not only about what people eat, it's perhaps more about the amount of activity they undertake. Calorific intake over the years hasn't increased substantially but the amount of activity that people undertake has declined and it's that imbalance that's the real problem.
“We believe we've a role to play in the debate along with many other stakeholders, whether they be governments, individuals themselves and parents of kids. We ran a pedometer promotion on Special K last year and we redeemed 50,000 pedometers in Ireland alone. It's steps like that by food companies which are helpful.”
Hegarty believes it is all about balance and gently urging consumers to make lifestyle changes, however subtle. Last year, Kellogg's was the first to introduce guideline daily amounts (GDAs) labelling on packs, giving consumers a full breakdown on the proportion daily amounts of sugar, salt and calories contained in the cereal.
Kellogg's has a policy of not actively targeting schools. Hegarty said that the only time they have an involvement with schools is when they are approached to provide an independent nutritionist to come in and talk to the pupils about diet and activity. As it is independent advice, there is no branding whatsoever on the part of Kellogg's.
Schools also make approaches to Hegarty for help with breakfast clubs. Kellogg's provide them with product and information. One in five average schoolgoers in Ireland and elsewhere skip breakfast. Hegarty says research shows that children who have a breakfast – whatever that breakfast may be – perform better and are less likely to snack.
What about the likes of Cadbury's and Mars who plan to label their products as 'treats'? “That's something for their market,” Hegarty said. “it's not a market we're in, so I couldn't really comment on what they do. Our approach to it has been with the GDA.”
Overseas, Kellogg's has not escaped brickbats on the health front. A pressure group in Boston filed a lawsuit against Kellogg's and the Nickelodeon children's channel with demands they stop Coco Pops ads aimed at youngsters. In the UK, Kellogg's was the target of consumer rights body Which?, following a complaint it lodged with the ASA.
Which? claimed that advertising for the new Coco Pops straws was “misleading and irresponsible” because the chocolate-lined wafer tubes, aimed at children who normally shun cereals, were promoted as a way to get youngsters to drink more milk. A Which? spokesperson said the ads send a confusing message about what is healthy.
Like many marketers, Hegarty is reluctant to discuss spend for fear it would give his competitors an advantage. “They could make a guess at it!” he quipped. But he will say that Kellogg's spends in excess of €5 million, so a fair guesstimate might be in the region of €7m and that would include advertising, sponsorships, promotions and PR.
Hegarty said that Kellogg's shy away from sponsorships as a way of promoting their brands. Rather the associations they get involved are aimed at getting people to be active. They run a rugby skills programme for kids with the IRFU in various parts of Ireland with the help of the likes of Brian O'Driscoll and Gordon D'Arcy. An initiative called 'Jump for Joy', which encourages secondary schools to run projects in aid of Crumlin Children's Hospital, has raised almost €2 over the past ten years.
Kellogg's sales directors Ian Leask and Jim McNeill have proved well-respected ambassadors for the company. For 25 years, CPC produced Kellogg's Corn Flakes and Rice Krispies until production was moved to Manchester. Adult brands like All Bran, Bran Flakes and Special K are produced in Wrexham, in north Wales.
Why is Special K with Berries so expensive? “Expensive, compared to what?” Hegarty responds. “You can buy a car for €10,000 or €200,000. With Special K with Berries, there's obviously the fruit addition. Like any added-value food, the more ingredients you add – and depending on how premium the ingredients are – it's going to affect price.”
Hegarty joined Kellogg's in 1991 as a sales rep in Belfast before moving to the UK until 1998 and then moved to national account and marketing roles. He replaced John Rooney as marketing director two years ago. Hegarty admires what C&C has done with Bulmers, in taking a drinks product which was struggling badly and completely turning it around.
Looking ahead, Hegarty sees the small cereal pots targeted at people on the go as an expanding consumer area. Aligned to that, there will be a lot of focus on food service areas, like Campbell Catering and Sodexho, who provide meals in the workplace. The channels in which Kellogg's has traditionally sold their products has changed.
Up until 1996, 100 per cent of KCI business was in cereals. They then launched the Nutri Grain snack brand in Ireland and since that other brand extensions came along. Snacks now account for 15 per cent of company sales. While all that has been good news for Kellogg's it can create conflicts for ad agencies with confectionery clients.
Pre-tax profits at KCI increased by 28 per cent last year to over €12 million. The group's new European headquarters, Kellogg Europe Trading, based in nearby Swords, had a deficit of €23.19m before tax in the six months after its incorporation in June 2004. KCI acts as a distributor for produce supplied by the European division.