Inside Kellogg’s $45 million investment in innovation

Kellogg’s Australia is tapping into rising demand for gluten free (GF) products with the recent launch of GF versions of Coco Pops and Sultana Bran cereals as part of its GF portfolio. It’s the latest in a string of innovations by the brand which has invested over $45 million on food innovation in the past 15 years. Kellogg’s managing director Esme Borgelt shares the thinking behind the latest food innovations, how the brand is connecting with consumers via gaming and virtual reality, and plans to develop its e-commerce channel.Inside FMCG: Kellogg’s has recently launched gluten-free versions of some of its popular cereals – was there strong demand from consumers for particular products to be GF? And how do you plan to build on that?Esme Borgelt: We always listen very carefully to our consumers when developing new recipes for breakfast cereals or from time to time improving on the recipes for some of our most loved brands to give our consumers more of what they want, and less of what they don’t. This is how we have remained at the breakfast table for so many Aussie and Kiwi families for almost 100 years!One of the insights we have been focused on in recent years, is gluten intolerance or gluten avoidance – in Australia, it’s reported that approximately 1 in 70 people have coeliac disease; and in New Zealand, an estimated 1 in 10 people are gluten intolerant.Even though an increasing number of people are trying to avoid gluten in their diets for various reasons, they don’t want to compromise on taste.  And at Kellogg’s, we don’t believe that they have to! That is why we have been working hard to increase the gluten free cereal choices we have available in our portfolio, and ensuring that these are great tasting food options at the breakfast table.We have released six gluten-free products over the last five years – our most recent being the Coco Pops and Sultana Bran gluten free versions which launched in June.The creation of a high-fibre gluten free cereal is a highlight for us – traditionally, gluten-free grains are lower in fibre, but our gluten-free Sultana Bran provides 15% of people’s daily fibre needs, which is a real game changer for the category.Inside FMCG: What other health food trends is Kellogg’s tapping into?EB: It’s not uncommon for Australians to lead the way in healthy eating globally. We’ve definitely noticed the shift towards healthier products, but this comes with some caveats because people don’t want to compromise on taste or choice. So, we need balance in both health and taste – and to provide plenty of choice at both ends of the spectrum because that is what our consumers tell us they want.Fibre is a key focus for us. We know that two out of three Aussies are not meeting their daily fibre needs. We also know that four out of five don’t eat enough fibre to protect themselves from chronic disease. This is more than a trend – as the lack of fibre could be costing the country more than a billion dollars in healthcare costs and lost productivity.Overall, fibre cereal is an extremely functional product to help consumers improve their digestive health and we currently have 38 Kellogg cereals that offer a good source of fibre. We have an ongoing commitment to highlight to our consumers the importance of grain fibre in digestive wellbeing. It is an important and wide-ranging conversation to be having, so we continue to invest in research and driving the message across our brands.We also know that some people are looking for a lower sugar diet – and we are meeting this need with a range of lower sugar offerings, such as Special K Lower Sugar, Just Right Fusion Almond + Cashew, and Cranberry + Apple.Furthermore, with more than two in five Australian adults living with high cholesterol, we have introduced Sultana Bran + with Cholesterol Lowering Plant Sterols to support those looking for a cereal that helps their cholesterol management. One serve of Sultana Bran + with Cholesterol Lowering Plant Sterols contains the full recommended daily dose of plant sterols needed to lower cholesterol levels.Our focus on developing products that support people’s health and wellbeing, is demonstrated by our investment in what we call ‘better-for-you’ options. In the past 15 years, we have invested over $45 million on food innovations.Inside FMCG: Can you explain a bit about how Kellogg’s is using virtual reality, gaming and social media to interact with consumers?EB: We love working with new technology. As most Australians (40 per cent) do not realise that their gut is actually a living ecosystem, we used our coral reef analogy and report to create a new world-first virtual reality experience – the Gut Bacteria Reef. This experience allows people to dive in and explore their gut ecosystem for the very first time. This is a contemporary way of delivering to our commitment to highlight the importance of fibre in digestive wellbeing, and a fun way for kids to learn about this too. We have also used augmented reality to create a bit of fun in recent years such as creating an interactive AR experience across our cereal packs in partnership with Crayola to bring families together through creative activities on-pack.Inside FMCG: How does the single-use plastic ban impact Kellogg’s and in what ways do you plan to tackle it?EB: Globally, we also have one of the smallest plastic packaging footprints among peer food companies.We are working towards our goal of using 100% reusable, recyclable or compostable packaging by the end of 2025, and we are very committed to this.Currently, our cereal and snack bar packaging is recyclable – and the boxes can go into your home recycling. Our cereal liners and snack wrappers can be taken back to store drop off locations in both Coles and Woolies. These then get recycled by REDCycle and Replas into products designed for outdoor use within the community, such as street furniture. To illustrate what is possible, we have worked on these sorts of projects ourselves, partnering with local community gardens and schools to produce playground installations, and even creating roadside bollards in our own company car park. We know we have some work to do on Pringles, and there are active projects globally which are working on solutions for this packaging. We are on track to meet our 2025 goals.We’re also making it easier for people to understand how to recycle our packaging, with the Australasian Recycling Label (ARL) being rolled out across all of our products.Inside FMCG: Are refillables on the horizon as part of Kellogg’s sustainability goals?EB: Never say never, we have conducted trials in other markets but are yet to pilot or launch anything here.Our key focus is on what consumers want from us. We listen to them very carefully, and if they tell us that this is something that is important to them, of course we will look at how we can do it without compromising the high standards of quality people know us for and expect of us.Inside FMCG: Given the increased interest in online shopping spurred on by the pandemic, is Kellogg’s interested in developing DTC/e-commerce?EB: We’ve been investing into e-commerce long before the pandemic hit, and it continues to be a top priority for our business – so Covid didn’t necessarily spark a new interest for us in this area but it did accelerate consumer uptake of online food retail, which we have continued to respond to. During this time, we have accelerated our technical capabilities in various ways, such as automating digital shelf data & analytics and upskilling our cross functional teams on e-commerce.We’ve worked closely with all of our partners throughout this time to ensure that all Australians have online access to a wide range of our products and promotions – delivered to their doorstep or available for click & collect from anywhere across the country.