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K Notes

COMPANY HISTORY
“Kellogg Company was formed when production of Kellogg’s Corn Flakes began at W.K. Kellogg’s newly formed Battle Creek Toasted Corn Flakes Company in 1906. The ready-to-eat cereal innovation would change the way people eat breakfast worldwide. W.K. Kellogg’s product innovation and drive for market expansion influences the Kellogg Company and the food industry around the world today.”
COMPANY OVERVIEW
The Kellogg Company delivered 2007 sales of nearly $12 billion, 2008’s outlook is seemingly strong for the Kellogg’s Company.   In the first half of 2008 Kellogg posted net sales of $6.6B or 10.4% better than the same period of ’07.   The results were driven by Kellogg’s continued commitment to innovation, in-store execution, while absorbing the significant increase in cost.      
Kellogg is the world’s leading producer of cereal and one of the largest producers of convenience foods[1]. With sales in over 180 countries, Kellogg's produces some of the world's most iconic and easily recognizable brands including: Keebler , Pop-Tarts, Eggo and Rice Krispies. As of FY 2007, the company booked 66% percent of its revenues in North America, 20% in Europe and the remainder in Latin America and Asia Pacific regions.
ENVIRONMENT
1. Economic Conditions:   The Kellogg Company, like other consumer packed goods (CPG) companies, faces the most difficult operating environment it has experienced in many years. Key among the many challenges for Kellogg is the speed of rising commodity prices for several of the key ingredients for its core cereal and snack foods lines.   The increase in commodities have including those in corn and wheat.   Additionally, the cost of energy has impacted the transportation and delivery to Kellogg's distribution network.   Next, Kellogg faces intense pressure in its core U.S. market where slowing consumer spending trends and time are looming ominously over sales.   A strong example of this consumer spending shift can be found in the grocery...