Kellogg CEO Says No “Discernible” Impact From Online Boycott

Kellogg CEO John Bryant said on Thursday that the company saw no “discernible” impact of an online boycott to oppose its decision to pull ads from a website formerly run by one of President Donald Trump’s top aides.

The Australian businessman said that while it was hard to gauge the effect of such consumer campaigns in view of the company’s sales, the company hadn’t seen any negative impact it could attribute to the boycott. It is noteworthy that Kellogg’s had announced in November last year that it was pulling its ads from Breitbart.com, a website that has come under severe criticism for featuring racist, sexist and anti-Semitic content.

The far-right American news website retaliated by calling for a boycott of the company.

Back then, Kellogg had issued a statement saying that the company works with media buying partners to make sure that its ads do not appear on websites that aren’t “aligned with our values”.
During a phone interview with a daily, Bryant said that his company had “no intention of getting into a political discussion.”

Meanwhile, Kellogg’s president for North America, Paul Norman, also said on Thursday that the company doesn’t generally advertise on news sites because of the chances of an ad ending up right next to a negative story.

The American multinational food company has reported flat cereal sales in the US for the last three months of 2016. New breakfast options have eroded the company’s customer base. Sales have been hit hard as the Special K, one of the company’s biggest and most well-known brands, has become outdated. The company has taken several measures to boost the brand’s image, which includes opening a cereal café in New York City. Success, however, has been elusive so far.

Kellogg has been aggressively pursuing cost-cutting methods to give a much-needed impetus to its financial performance. The company announced this week that it will start using grocers’ warehouses instead of directly delivering many of its products to store shelves. The decision will be fully implemented in the second quarter of 2017, which will result in closing down 39 of the company’s distribution centers and laying off over 1,100 employees. Kellogg believes that these measures will help it cut down its costs and use that money for investment in activities such as advertising, which will have a direct bearing on its sales.

The company revised its sales forecast for 2017, estimating the currency-neutral sales to decline by about 2 percent this year on account of the discounts given to retailers when the company does not provide direct delivery. Kellogg had previously predicted flat sales.

While domestic cereal sales were flat in the quarter, sales for the broader U.S. Morning Foods unit went down as the company decided to discontinue some products. The company expects the broader cereal category to be down 1 percent this year.

The company registered total sales of $3.1 billion for the quarter, marginally better than its forecast of $3.07 billion. However, the Michigan-based company has reported a loss of $53 million. A huge chunk of that loss can be imputed to the charges for restructuring and deconsolidating its business in crisis-torn Venezuela.