Strong earnings from Kellogg

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Kellogg this week announced a solid second quarter, beating
expectations with a 16 percent rise in earnings, though the company
wouldn't reveal to what extent its functional food products
contributed to this figure.

The company's net income rose from $203.9 million, or 50 cents per share, to $237.4m, or 57 cents - 3 cents ahead of analysts' estimates - compared to the same period last year.

"It is particularly gratifying that we were able to achieve this excellent performance while absorbing increased commodity and benefit costs,"​ said Carlos Gutierrez, chairman and chief executive officer of Kellogg.

Kellogg​ North America reported overall net sales growth of 5 percent, led by a 7 percent increase in sales of retail snacks, while North American cereal sales increased by 2 percent.

Although Gutierrez said the popularity of low-carbohydrate products spawned by the Atkins and South Beach diets appears to be waning, only earlier this month the company expanded its low-carb range, with particular prominence given to a low-carb variety of Special K, the cereal marketed to aid weight management.

"This brand was only shipped at the end of the last quarter, and so it is too early to say exactly how it is doing, but retailer acceptance has been pretty good,"​ Simon Burton, director of investor relations and competitive analysis told NutraIngredientsusa.

He also noted that the Nutri-Grain nutrition cereal bars, such as the granola bars and bites with granola, fruit and vitamin B, have been quite successful, even if they are a fairly small business for Kellogg.

As to whether functional and health foods could make up a larger part of Kellogg's portfolio in the future, Burton was reluctant to speculate.

"We are already competing in the oragnic and natural product sector with our Kashi brand, and would have to see what commodities were available before we decided to produce more functional foods,"​ he said.

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