Kellogg Company 2007 Annual Report
Total Shareowner Return
Net Sales (million $)
Vision To be the food company of choice.
Mission To drive sustainable growth through the power of our people and brands
by better serving the needs of our consumers, customers and communities.
Foods Index -8%
03 04 05 06 07 03 04 05 06 07
For the seventh consecutive year,
Net sales increased again
With 2007 sales of nearly $12 billion, Kellogg Company is the world’s leading producer of cereal
Kellogg Company’s total return to
in 2007, the seventh
and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal
shareowners exceeded that of the
consecutive year of growth.
bars, fruit-flavored snacks, frozen waffles, and veggie foods. The Company’s brands include Kellogg’s ®,
S&P Packaged Food Index.
Keebler ®, Pop-Tarts ®, Eggo ®, Cheez-It ®, Nutri-Grain ®, Rice Krispies ®, Morningstar Farms ®, Famous Amos ®,
Special K ®, Stretch Island ®, All-Bran ®, Frosted Mini-Wheats®, Club ® and Kashi ®. Kellogg products
Cash Flow (a) (million $)
Net Earnings Per Share ($) (diluted) Operating Profit (million $)
Dividends ($ per share) are manufactured in 18 countries and marketed in more than 180 countries around the world.
Table of Contents
Letter to Shareowners 2
Global Operations 8
Sustainable Dependable Global Brands 14
Our Nutrition Heritage 15
Our People 16
03 04 05 06 07
03 04 05 06 07
03 04 05 06 07 03 04 05 06 07
Including over $60 million of
Dividends per share have Operating profit increased
Earnings per share of $2.76 Environmental Sustainability 18
voluntary pension contributions,
increased 19% over the past despite significant cost
were 10% higher than 2006.
Corporate Social Responsibility 20
cash flow for 2007 remained
3 years. inflation and continued
strong at $1.03 billion.
reinvestment into our business.
Corporate Officers 22
Board of Directors 23
Manufacturing Locations and Brands 24
(dollars in millions, except per share data) 2006 Change 2005 Change Annual Report on Form 10-K
Net sales $10,907 7% $10,177 6%
44.0% -0.2 pts
Gross profit as a % of net sales 44.2% -0.7 pts 44.9% -
Operating profit 1,766 1% 1,750 4%
Net earnings 1,004 2% 980 10%
Net earnings per share
Basic 2.53 6% 2.38 10%
Diluted 2.51 6% (b) 2.36 10%
Cash flow (net cash provided by operating
1,031 8% 957 24% 769 -19%
activities, reduced by capital expenditure) (a)
Dividends per share $1.14 8% $1.06 5%
(a) Cash flow is defined as net cash provided by operating activities, reduced by capital expenditures. The Company uses this
non-GAAP financial measure to focus management and investors on the amount of cash available for debt repayment,
dividend distributions, acquisition opportunities and share repurchases. Refer to Management’s Discussion and Analysis
within Form 10-K for reconciliation to the comparable GAAP measure.
(b) Comparable 2006 earnings per share growth of 11% excludes $65 million ($42 million after tax or $.11 per share) of costs
attributable to the Company’s adoption of a new accounting standard that required the expensing of stock options.
At Kellogg we have an unwavering focus
on the long-term health of our business.
Letter to Shareowners
Thanks to the hard work and passion of Kellogg Kellogg employees achieved these solid results Operating efficiencies. We continued the disciplined Brand building. In 2007 we continued to focus on
Company employees around the world, 2007 was despite being faced with the most difficult operating funding of projects that will provide cost efficiencies building our brands through advertising and consumer
another year of continued sales growth, strong environment our industry has experienced in many and enhanced productivity into the future. It has promotion. In fact, we spent more than $1 billion on
financial results and increased shareowner return. years. World commodity prices for many of our raw become a part of the Kellogg culture for employees advertising this year. We also focused the expertise
The growth was broad-based across categories and materials spiked to all-time highs. Fuel and energy throughout all areas of the organization to of our marketing and promotions groups
geographies. Here are some highlights: inflation was dramatic, but the cost pressure did not continually assess our supply chain and throughout the world on increasing the
S a les
shake the solid foundation upon which we have network for potential improvements desirability of our brands and building
• Net sales increased 8% to $11.8 billion. built our business – a business model that is simple, in simplicity, effectiveness, cost consumer brand loyalty. Advertising
resilient and designed to deliver sustainable growth. control and quality. Solutions and and consumer promotions build
• Internal net sales, which excludes the effects of
Kellogg people rose to meet this year’s challenges system enhancement projects sustainable brands sought by
currency exchange rates, increased more than 5%.
P r ic e/Mi x • G
by delivering compelling innovation, exciting new are initiated at all levels of consumers and selected as
t • Incre a s e B r
• Internal operating profit increased by 3%.
advertising and cost efficiencies around the world. the company, and there is a household mainstays. We
• Diluted net earnings per share (EPS) grew 10% This dedication to superior execution is characteristic pervasive sense of accountability focused on increasing our
to $2.76. of Kellogg employees everywhere, and we sincerely for keeping our cost structure presence with more targeted
thank each person in our organization for their lean while continuing to produce communications at a lower cost,
• Cash flow was over $1 billion, or 9% of net sales.
commitment to success and their passion for results. We believe this is the right allowing us to invest more in our
• Total shareowner return was 7%.
our business. way to run our business day-in, best ideas.
• The dividend was increased by 7% starting in the day-out, which is why we account
third quarter. ati
A proven business model. At Kellogg we have an for these up-front investment costs By continuing these significant
• D ri
ve In n o v
unwavering focus on the long-term health of our within our P&L as part of the cost of investments, we are building a
• This was our sixth consecutive year of growth in
business. While we are realistic about the challenges doing business. This practice avoids the company with a solid future of dependable
sales, operating profit and earnings per share.
ahead, our performance in 2007 demonstrates the need for large, one-time charges that impair performance and consistent growth. Our
• We reinvested in the business through increased
strength of our business model and its capacity to earnings quality or obscure actual performance commitment to reinvesting in the business is a core
brand building, innovation capability, expansion
produce growth, even under difficult conditions. for a particular quarter or year. pillar of our sustainable growth business model.
and cost-saving projects, all of which enhance
Despite increased inflation, we continue to
our future sustainable performance
reinvest into our business.
David Mackay (Left)
Chief Executive Officer
Jim Jenness (Right)
Chairman of the Board
We take a global approach to innovation,
expanding and adjusting our portfolio to
meet consumer needs around the world.
Letter to Shareowners
Realistic targets. Every day, we manage our business A clear and focused strategy. The focal points for
expenditures. In 2007 this disciplined financial
Innovation. Kellogg drives development and visibility
in a way that supports its dependable, sustainable strategy again enabled continued and rigorous building our business have remained constant over
of a robust pipeline of new products. In 2007 we
performance. Our long-term targets of low single-digit review of costs while, importantly, funding the the past six years:
continued our commitment to this key growth driver
net sales growth, mid single-digit operating profit investments that will grow and sustain our business.
by increasing our innovation. We take a global
growth, and high single-digit EPS growth encourage • Grow our cereal business
approach to innovation, expanding and adjusting our
Flexibility. Our strong cash flow allows us to actively
Kellogg people to prioritize their activities and make
portfolio to meet consumer needs around the world. • Expand our snacks business
good decisions that support the long-term health make decisions based on what is best for sustaining
More than 270 new products or adaptations of other
• Pursue selected growth opportunities
of our business – not simply hit short-term, our business and for building shareowner return.
successful products were introduced in 2007 alone
unsustainable goals. Realistic targets drive In addition, our cash flow gave us the flexibility
and we generated nearly $2 billion, about
We remain committed to this
the behaviors and decisions that most to repurchase 12.4 million shares of Kellogg
17% of sales, from products launched
simple strategy because it
ro w N effectively deliver sustainable growth. Company stock, increase the quarterly dividend
within the past three years. These •
•G works. The effectiveness of
It’s the right way to run our business paid to shareowners and acquire companies in key
results exceeded our long-term ni m
RO our strategy is proven, and
and is responsible management of geographies or product lines that fit with our strategy.
target of 15% of net sales from
our results in 2007 and
our shareowners’ interests.
innovation and helped drive
the momentum with
another year of improved sales
MANAGE which we enter 2008
orking Capital •
Financial vision. Strong cash
volume, price and mix for
are indicators of its
flow generation. The ability to
FOR CASH generate cash is an essential
component of a financially healthy
Our innovation teams around
around the world
company. As a result of strong
the world are focused on
net earnings, disciplined capital
developing value-added and
expenditures and sound balance sheet
differentiated products that
management, our cash flow in 2007
provide additional sales and/or
p i ta
l Expenditure •
was over $1 billion, delivering again on
improved economics. This focus
our Manage for Cash operating principle.
continually improves our already-strong
Combined with our focused business strategy,
portfolio by improving mix and producing
our disciplined financial strategy creates a solid
higher returns. Strong innovation, backed with
platform for sustaining cash flow for years to come.
solid marketing support, will drive top-line growth
and keep our categories vital. Our commitment to
Disciplined expenditure. Following the Manage for
investing in innovation and research and development
Cash principle keeps Kellogg people around the
is another core pillar of our sustainable growth
world focused on continually exploring strategies
business model. In line with this, we are expanding
for decreasing the amount of cash committed to
the facilities and capabilities of our state-of-the-art
working capital. It is part of the way we manage
global research and development center, the W. K.
our business every day. Furthermore, we are
Kellogg Institute for Food and Nutrition Research. This
committed to carefully planning and prioritizing
is one way we will continue to drive top-line growth.
the amount of cash we spend each year on capital
Our business model and our focused
strategy served us well in 2007.
Letter to Shareowners
Entering 2008 with momentum. With our success
Some of our strategic growth leverage Kellogg Company’s sales, grow operating profit, and continue to reinvest
opportunities will show brand-building and innovation and continued investments in 2007, we enter 2008 in our business for future growth. In short, while
tremendous potential right expertise, our understanding with confidence. Commodity and energy prices delivering strong growth in 2007, Kellogg people
away, while others will take of the biscuit and ready-to-eat are projected to remain high and volatile, and around the world have set the stage for another year
time and further investment cereal categories, with UB’s competition in the marketplace will likely intensify. of strong performance in 2008.
to grow. Because we manage existing manufacturing, sales The year ahead will no doubt be challenging.
our business for long-term and distribution infrastructure However, because our business model works, we are Finally, we thank our shareowners for valuing our
performance with realistic to drive continued strong confident in our ability to deliver strong results yet long-term perspective on growth and investment.
targets, we have the flexibility growth of this business. We again in 2008. We are confident we will grow net We are steadfast in our commitment to delivering
to make strategic investments have stringent criteria for sustainable, dependable performance in the future.
that strengthen the health of our assessing growth opportunities, and this investment
company. Late in 2007 we made acquisitions relating was selected for its ability to create value in the long
to Bear Naked Inc., maker of all-natural granola and term and contribute to the sustainable, dependable
trail mixes, and Gardenburger brand. growth of Kellogg Company.
2007 summary. Our business model and our
Our emerging markets growth strategy moved forward
significantly in 2007. We grew our ready-to-eat cereal focused strategy served us well in 2007. Throughout David Mackay Jim Jenness
market share in Turkey to 22%. Before our 2006 joint the year, Kellogg people around the world President Chairman of the Board
venture with local Turkish food distributor, Ülker, our successfully managed difficult external challenges Chief Executive Officer
market share was just 2%. We are actively exploring – unprecedented commodity price increases and
other international alternatives and have identified continued tough competition – and delivered another
Eastern Europe and Asia as areas where we can year of strong earnings and increased shareowner
enter developing markets with immediate scale and value. Each quarter of 2007, Kellogg Company was
distribution capabilities. faced with higher input costs, and each quarter we
were able to grow our business and increase our
Early in 2008 we acquired The United Bakers investment in cost-efficiency projects. We raised
Group (UB), one of Russia’s largest cracker, cookie our 2007 annual earnings guidance twice during
and breakfast cereal producers. UB’s products, the year and ultimately delivered solid results. This
marketed primarily under the Yantar and Lyubyatovo performance speaks to the power of our business
brands, are a good strategic fit with the Kellogg model, and we remained focused on it despite the
portfolio and expand our presence in international added challenges. In 2007, we continued to reinvest
snacks and cereal markets. into our businesses through increased brand building
and additional cost-saving projects. We continued to
This acquisition is a long-term investment that invest wisely in key growth opportunities in strategic
provides Kellogg with a tremendous platform for categories and geographies. Our innovation pipeline
growth in a large and fast-growing market. We will continues to be substantial and dynamic.
By continuing to focus on nutrition, taste
and convenience, Kellogg innovation
really resonated with consumers.
measured category share rising to 2008, we are excited about
Keebler Fudge Shoppe Fudge
Global Operations the move of Kashi snacks (bars,
in 2007. This was driven by
Stripes and Chips Deluxe. We
innovations such as Sandies Butter cookies, crackers) to the DSD
built upon these successes in
Pecan Drops and Keebler Dipping distribution system.
2007 by introducing Right Bites
North America Delights. Echoing this positive
Fudge Shoppe Grasshopper and
Ready-to-eat cereal. In 2007 we Mini-Wheats Strawberry and Rice The Pop-Tarts toaster pastry business
progress was a strong performance
saw sustained growth in our North Krispies Vanilla cereals, added to the from Famous Amos. continues to be strong and retains a
American Retail Cereal business. strong sales growth. Additionally, category share above 86%. During
Strong performances in our Cracker
Plus, measured channel share grew our largest cereal brand in the Club 2007, we launched Pop-Tarts
In 2007 innovation drove strong
business came from power brands
for the full year to 34.1%, making channel, Special K, experienced sales in Wholesome Snacks with the Printed Fun, debuting with Trivial
including Club, Town House and
this the seventh consecutive year broad growth. performance of Nutri-Grain Fruit & Pursuit and Barbie editions.
Cheez-It, which all grew in dollar
of share growth in the U.S. retail Nut bars, along with new flavors of This exciting innovation allows
sales and measured market share.
ready-to-eat cereal category. Snacks. North American Retail Kellogg’s Crunchy Nut Sweet & Salty consumers to enjoy edible printing
This performance was aided by
Snacks had a very good 2007. Our bars. Special K and Special K Honey on their favorite toaster pastries.
innovation in Snack crackers,
By continuing to focus on nutrition, business, consisting of cookies, Nut bars were also a huge success.
including Club Puffed and Cheez-It
taste and convenience, Kellogg crackers, wholesome snacks, Other snacks that performed well
Stix. All-Bran has a hit innovation
innovation really resonated with fruit-flavored snacks and toaster
include Kashi snack bars, which
Canada had solid performances
with All-Bran crackers, a strong
All-Bran continues to be one of
consumers. Our innovations, pastries, lapped strong 2-year from the popular All-Bran Snack continue to have significant repeat
performer rated best snack cracker
our strongest global brands, and
including Special K Chocolatey growth rates by building on 11% in Bites, Munch’ems, Nutri-Grain, consumer purchases. Fruit Snacks
by Women’s Health magazine.
we launched All-Bran Strawberry
Delight, proved a big success both 2006 and 7% in 2005. We posted and Kellogg’s Crunchy Nut Sweet & were innovative in the natural/
All-Bran continues to grow in
Medley cereal in the U.S. in January
at breakfast and as an evening 7% internal sales growth to finish organic channel with FruitaBü
2008. Kashi had another successful
snack. Plus, perennial favorites the year. Smoooshed fruit products and in
year and added to its popular line
Raisin Bran Crunch cereal and Our Special K brand extended its the grocery channel with Stretch
Our Cookie business
with Kashi GoLean Heart to Heart
Special K cereals responded well We’re able to maintain sustainable global reach with protein water and Island fruit leathers and Yogos fruit
was important to our
Blueberry cereal and Kashi GoLean
to our advertising strategies. growth by building existing brands meal and snack bars, showing that flavored snacks. Fruit Flavored
Honey Almond Crunch cereal,
and targeting innovation by utilizing “The Difference Snacks were moved into the DSD
which contains DHA omega-3.
Rice Krispies, one of our oldest our DSD (Direct Store Delivery) is K” for many system to provide additional sales
brands, also experienced a strong distribution system. Recently, the consumers. As opportunities and allow these
Throughout the U.S., consumers
year, thanks to the introduction of Advantage Group Performance we look forward products to gain shelf presence.
are having “milk-sippin’ fun”
Rice Krispies with Real Strawberries Monitor rated the Kellogg DSD
with new Kellogg’s Cereal Straws
and our “Childhood is Calling” system #1 among all snack
– launched with Cocoa Krispies and
advertising campaign. Great food companies.
Froot Loops flavors.
innovation continued in kid’s
cereals with Froot Loops Smoothie We increased advertising at
Canada’s cereal business had a
and Corn Pops Peanut Butter, a double-digit rate and had a
strong year. New products such as
which had new advertising particularly good innovation year
Special K Fruit & Yogurt,
campaigns. Each of these with portion-controlled packs. In
All-Bran Guardian, Frosted
innovations lifted base brand 2006 we introduced 100 Calorie
sales as well. Right Bites packs in Cheez-It,
Europe’s growth was broad-based across
countries and categories – driven by strong
commercial programs, category-leading
product innovations and a double-digit
increase in advertising investment. Europe
Kellogg Europe turned in another Adult consumption of cereal Our Snacks business in these
solid year in 2007. In what continues to expand across markets is still young and continues
continues to be a challenging the region. Optivita, our heart to expand rapidly, helped by
operating environment, overall health cereal, was launched, and increased availability and inclusion
sales increased mid single-digits, combined with market leader in major cereal programs.
lapping similar growth in 2006. Special K, continued to drive our
Europe’s growth was broad-based
adult business. Performance in France, our second
across countries and categories largest European market, was also
– driven by strong commercial Southern Europe reported the positive with mid single-digit growth
programs, category-leading product strongest growth across the area, in cereal.
innovations and a double-digit with high single-digit sales increases
Frozen and Specialty Channels. Specialty Channels. Growth in our
increase in advertising investment. in both Italy and Spain. With per
Solid performance came from Specialty Channels business was
capita cereal consumption in
Frozen and Specialty Channels, driven by Food Away From Home,
Our two most developed markets, these markets below the
with sales rising 6% for the year, as well as Convenience and
U.K. and Ireland, posted mid levels of Northern Europe, further
building on 8% growth in 2006 Drug channels.
single-digit growth in cereal and growth potential exists.
even stronger growth in snacks.
Success continued with our
We increased our share in a U.K.
Frozen. In 2007 sales in our Frozen strategy to leverage key equities
ready-to-eat cereal catagory that
business grew, driven by a double- for channel relevance. This was
to dinner. With our acquisition of
continued to show strong growth.
digit increase in advertising from clearly illustrated in our successful
Gardenburger veggie foods, we
We also grew share in the cereal
launch of Jump-Starts breakfast kits
2006. Our leading market share will be producing more exciting
bar category in both markets.
in frozen breakfast products grew for the K-12 school segment. This
Programs like our Special K
because of strong innovation in convenient breakfast alternative
“Drop a Jeans Size” proved very
Eggo Blueberry pancakes, Eggo for public schools is designed to
With “7 whole grains on a mission,”
effective in engaging consumers.
waffles and Eggo Stuffed French provide students access to a
Kashi continues to provide
And there was strong response to
Toaster Sticks. In addition, our quality breakfast.
additional growth opportunities
cereal innovations like Special K
healthy waffle segment had solid with its popular frozen line. Kashi
Sustain and Coco Pops Creations.
growth with the launch of And finally, the success of our
waffles are off to a good start, and
Special K Mini Breaks snacks were
Nutri-Grain Cinnamon waffles and Convenience/Drug business
the new frozen entrees and pizzas
introduced in the second half of
Special K Red Berries waffles. continued from leveraging core
have performed above expectations.
the year to a strong start, and both
equities, such as the introduction
We saw a strong response to three
Rice Krispies Squares and
of single-serve Keebler Soft Batch
Our Veggie Food business, under additional entrees and introduced
Rice Krispies cereal enjoyed
the Morningstar Farms brand, cookies for convenience stores.
three new pizza varieties in 2007.
tremendous growth, driven by
continues to perform well. In This, along with broad wins
engaging advertising campaigns.
2007 we added to the popular in the Drug channel through
Another strength is our Club
Morningstar Farms sausage patties efficient participation in key
business, which continued to
with the introduction of Breakfast promotion periods such as back
successfully build the Kashi brand
Starters and Breakfast Bites. Our to school and New Year’s
franchise. The launches of Kashi
consumers continue to “see veggies resolution, also contributed to
frozen entrees and pizzas were key
differently” with creative new our continued success.
to the brand’s continued success
choices like Mushroom Mozzarella in Club.
Veggie Bites. Consumers can now
enjoy meatless diet choices with
our product line from breakfast
Our Mexico business has now grown to be our
third largest business, behind the U.S. and U.K.
Latin America Asia Pacific
Kellogg Latin America continued Colombia, Ecuador and Venezuela We continued to strengthen the Sales in Asia Pacific were about flat and Wholesome Snacks were and while total sales declined, we
to grow and showed strong was the result of strong growth relevance of the cereal category for 2007 as a difficult competitive launched in Korea in June 2007. are encouraged by the aggressive
performance through 2007. Our in advertising investment and the with investments in innovation of environment in Australia was offset Our consumer programs were strategy we have in place to move
popular brands like Special K and
Mexico business has now grown rollout of our Snacks portfolio. by strong sales increases across well tested and grounded in strong this business forward in 2008. We
to be our third largest business, the rest of our Asian business unit. consumer insights. We effectively refocused our media spend and
behind the U.S. and U.K. Double- Throughout Latin America, our This year’s growth in Asia was engaged Asian consumers with advertising efforts, and we are
With programs like the Special K
digit sales growth in Brazil, results were driven by strong driven by our existing Ready-to-eat advertising and innovations built putting emphasis on developing a
Challenge, we were able to attract
performance of cereal businesses in Korea, South largely off power brands like more sustainable innovation plan.
All-Bran and Special K.
existing brands like and retain new consumers. We Africa and India, as well as our Australia saw success with healthy
Zucaritas (Frosted continue to build the Special K brands such as All-Bran and Whole
new Wholesome Snacks business
Flakes) and Grain Mini-Wheats cereal. Snacking
brand, including ready-to-eat cereal, in Japan and Korea. Our success Kellogg Company’s growth in India
All-Bran. as well as snack products such as in these categories is based on our was based on continued brand- brands that performed well include
Special K Delicia (Bliss) Bar. LCM Shakes, Kellogg’s Crunchy Nut
efforts to entice consumers with building investment in our two core
brands, Kellogg’s Corn Flakes and bars and the re-launch of Be Natural
programs that combine global
Chocos. Innovation contributed to
We expanded our presence learnings with local expertise. bars, which have quickly gained a
in Mexico with the growth of growth with the launch of single- 2.2% share. Our Australian business
healthy drinks (All-Bran ready- It was another strong year for Japan serve cereal pouches. is a good one for Kellogg, and we
to-drink). Sales for this business and Korea. Our Snacks business are putting steps in place to support
were significantly above our enjoyed its first full year in Japan, In Australia, we faced strong a strong future.
expectations, driven by excellent competitive headwinds in both
consumer response. Ready-to-eat cereal and Snacks,
For more than a century, our company has
built its success around a portfolio of powerful
global brands that continue to be as relevant to
Our Nutrition Heritage
our consumers’ needs today as when they were
first created. For more than 100 years, Kellogg around the world. Products that
has built a legacy of leadership in don’t meet the criteria will either
health and nutrition. We believe be reformulated or they will not
that balance − or “calories in, be marketed to children under 12
calories out” − must remain the years of age. The Nutrient Criteria
central tenet of achieving weight will also guide future innovation
management and a healthy and product development. Over
lifestyle. We have a long-standing time, the company will work toward
Sustainable Dependable Global Brands commitment to help consumers providing consumers with even
successfully manage both sides of more product choices featuring
that equation through our products, enhanced nutritional value.
To help consumers make informed
packaging, promotions, community
For more than a century, our ability to adjust to and capitalize areas of global commonality and
food decisions, Kellogg rolled out
efforts, sponsorships and nutrition- For more information, please visit
company has built its success on changing consumer dynamics drive scale to our global brand
front-of-pack labeling on ready-to- www.kelloggcompany.com and
around a portfolio of powerful and trends, creating new growth initiatives in innovation, promotion
eat cereal packages in a number www.kelloggnutrition.com.
global brands that continue to opportunities and momentum. and consumer ideas. Recognizing
of markets, including Europe,
Kellogg offers consumers a wide
be as relevant to our consumers’ the differences that are so often
Australia, North America, Mexico
variety of choices, including
Dependable. Through our Global
needs today as when they were required at a local level allows
and Korea. The easy-to-use front-of-
low-fat, low-salt, reduced-calorie,
first created. Key to their success Marketing Leadership Team (GMLT), Kellogg Company to execute
pack summary gives a snapshot of
has been anchoring our brands we have the ability to ensure the marketing programs effectively.
how a food fits into an individual’s
and portion-control options.
to global needs, continuing to transfer of winning ideas and
daily diet and complements existing
We continually launch product
build the relationship between best practices around the globe. Through a portfolio of powerful
nutrition labels. This system was first
innovations to meet consumers’
our brands and consumers This allows us to quickly leverage brands, strong marketing leadership
launched by Kellogg in Europe and
health needs, such as digestive
through strong marketing and success across the Kellogg world and a culture focused around the
Australia, where it has been well
health, heart health and shape
innovation, and leveraging our and maximize the strength of our power of ideas, we have been able
received and adopted by the food
management. We have also
Global Marketing Network to plans. The GMLT meets to share to create a platform of sustainable,
industry and some retailers.
reduced or removed trans
share ideas and maximize global best practices and insight around dependable growth across the
fatty acids from almost all of
growth opportunities. our innovation pipeline, in-market Kellogg world.
In June 2007, Kellogg announced
performance and advertising
a global commitment to adjusting
Sustainable. Special K, All-Bran campaigns and promotional
how and what we market to
We believe that educating
and Rice Krispies are just three programs that are producing strong
children under 12. We established
consumers empowers them to
brands in our global portfolio that market results.
a global nutrient standard (Nutrient
make good nutritional choices.
illustrate the continuing relevance
Criteria) based on a broad review
We provide comprehensive
Performance. By taking a cue from
of Kellogg. The international
of scientific and government
nutrition information, nutrition
popularity of these brands the mantra “Think Globally, Act
reports. Kellogg will apply the
education and healthy-lifestyle
demonstrates Kellogg Company’s Locally,” we are able to look for
Nutrient Criteria to all of our
messages on millions of packages
products marketed to children
as well as online.
• ≤ 200 calories
• ≤ 2 grams of saturated fat
• labeled 0 grams of trans fat
• ≤ 230 milligrams of sodium
• ≤ 12 grams of sugar
Our company was founded on a commitment
to people and doing business in a responsible
manner. This commitment continues to guide
us today and serves as the foundation of our
efforts to drive sustainable business results.
Kellogg Company’s focus on allows efficient and accurate our business leaders and employees Our company was founded on a
people builds on the investment exchange of the information we are active participants in creating commitment to people and doing
in people which our founder, need to do business. a work environment that values business in a responsible manner.
W. K. Kellogg, dedicated himself differences in thought, culture, This commitment continues to
Culture-Guided Results. Our
to more than 100 years ago. experiences and background. guide us today and serves as the
culture is the foundation of Our employee affinity groups foundation of our efforts to drive
everything we do, and our K Values – Kellogg Multinational Employee sustainable business results.
continually remind us that how we Resource Group (K-MERG), Kellogg
generate business results is just as African American Resource Group
An employer of choice:
important as the results themselves. (KAARG), Hispanic Resource
Hispanic Business – Kellogg in Top 60 Companies for Hispanics An important part of maintaining Group (HOLA), Women of Kellogg
DiversityInc – Kellogg in Top 25 Noteworthy Companies for Diversity an effective culture is gathering (WOK) and Young Professionals (YP)
LatinaStyle – Kellogg in Top 50 Companies for Latinas feedback from our employees on a – promote cultural and generational
regular basis. awareness and provide
Black Enterprise – Kellogg in 40 Best Companies for Diversity
In 2007 we conducted our third in opportunities and
ever before. If Kellogg is to fulfill its future. Our leadership programs a series of culture surveys designed professional
vision to be the food company of ensure a deep pool of management to gauge employee perceptions mentoring.
choice, we must also strive to be an talent throughout the organization of our work environment,
Three important factors make employer of choice. – so that we’re prepared not only advancement opportunities and
Kellogg Company great: our for filling key positions in the near ability to do their work. Results
people, their passion for excellence Our people programs are designed future, but are creating the next of this survey will help us ensure
and their pride in our products. to attract and hire the best people. generation of Kellogg leaders. We that our people have the necessary
Kellogg Company’s almost Yet, hiring talented individuals clearly define what is expected from information and opportunities to
26,500 employees are talented isn’t enough. To retain our a Kellogg leader and are focused contribute their best work and
and dedicated to helping the employees and make sure they are on building each leader’s ability to build satisfying careers.
company achieve its business prepared for current and future engage and develop our employees
results. Our Human Resources roles, we’ve implemented programs while driving business results. Kellogg has long emphasized
strategy focuses on making certain that help employees navigate the having a diverse and inclusive
Creating Synergy and Efficiency.
that Kellogg has the strongest onboarding process, build their culture that reflects our consumer
possible teams around the world skill sets, identify career growth By sharing ideas and best practices base. The company’s focus on
to help us achieve our vision of opportunities, and become effective around the Kellogg world, we’re diversity and inclusion ensures that
becoming the food company people managers. able to create synergy among our
of choice. business units. We’re looking at
Kellogg Leaders, Today and technological solutions to simplify,
A Talent Powerhouse. The Tomorrow. Strong, effective standardize and automate many
competition for qualified leaders are paramount to Kellogg of our processes, which will ensure
individuals is more intense than Company’s success now and in the that our global infrastructure
This year we’ve implemented several
innovative campaigns to promote the
restoration of natural resources.
Water Usage. We are also doing
annually. For example, 25 million generations of students and teachers
pounds of paper packaging have our part to minimize water use. with healthy nutrition options
been eliminated through a waste Our Queretaro, Mexico, plant and environmental education
reduction initiative associated was given the highest award with opportunities. The brand kicked off
with bulk material shipping. By a “Recognition to Environmental the partnership with the Fruit Tree
taking out the board on Special K Excellence,” which will be Planting Foundation with three
bars, we’ve eliminated 4 million awarded to the company from orchard plantings in 2007 and plans
pounds of packaging, and liner President Calderon. The plant to fund the planting of 25 to 30
Environmental Sustainability reductions in 2006 eliminated reuses 57 million gallons of orchards by the end of 2008.
more than 3 million pounds of water every year. And earlier this
plastic packaging. year, washing equipment was We recently formed a cross-
redesigned to reduce water use functional Environmental
Our Environmental Commitment. Focusing on efficiency
We also look to optimize the use by 7 million gallons. Stewardship Council to further
Kellogg Company is committed improvements in our operations
of materials that are recyclable drive our sustainability efforts.
to minimizing the environmental has helped reduce our energy
Where We Are Going. In 2007 we
and contain significant recycled Beginning in 2008 we are
impact of our businesses consumption, thereby reducing our
content. In fact, the first box of implemented several innovative committed to providing greater
while being socially and GHG emissions. Our energy use
Kellogg’s Corn Flakes came off the campaigns to promote the transparency to our shareowners
economically responsible. per pound of product produced has
line packaged in 100% recycled restoration of natural resources. on the environmental impact of
declined by more than 15% during
paperboard, and Kellogg has used our business. Although we have
At Kellogg we strive to conduct the past 10 years.
In Ireland, Kellogg’s Corn Flakes
recycled board for most of our many things to be proud of, we
and grow our business in a manner
“Give the Gift of Trees” campaign
products since 1906 – we are one realize we are just beginning
that protects the environment and Our Global Logistics team
of the largest users of recycled has donated more than this challenging journey toward
demonstrates good stewardship aggressively searches for ways to
45,000 trees to the charity Bóthar.
paperboard in the U.S. becoming an environmentally
of the world’s natural resources. deliver more products with fewer
To see a rolling ticker that provides sustainable company.
We work toward continual vehicles and less energy use. Case-
Waste Management. We are regular updates on the number
improvement through the size adjustments, use of intermodal
Please visit www.kelloggcompany.com
of trees donated, please visit www.
always looking for ways to improve
development of specific programs transport, and product sourcing
and reduce greenhouse gas (GHG)
our waste management programs for more information and
that address the environmental choices all contribute to our
emissions. The EPA works closely
practicing the 3Rs: Reduce, The site also provides more updates on our environmental
cost and impact of our activities, saving thousands of gallons of fuel
with each company in the program
Reuse, Recycle. information about the positive sustainability efforts.
products and services. These annually. For example, 8 million
to review its GHG Inventory and
impact this project will have
programs include a commitment truck miles have been eliminated
Inventory Management Plan and
Our manufacturing facilities on communities in Africa.
to use resources efficiently, by making a case-size change for
provide guidance in setting a GHG
recycle more than 80% of waste
minimize waste, and promote several cereal products. In addition,
emissions reduction goal. Kellogg
generated. At two of our cereal In the U.S., Stretch Island
resource conservation. our fleet vehicles automatically shut
Company’s primary source of GHG
Fruit Co., makers of FruitaBü fruit
plants, we implemented a program
down after five minutes of idle time.
emissions is the use of energy at our
that diverts an additional 1,000 snacks, is helping fund the efforts of
Energy Improvements and Climate manufacturing facilities and in our
tons of waste per year from the Fruit Tree Planting Foundation.
Change. In 2006 we implemented Packaging Efficiency. Our
landfills to recycling. Our Bremen, Orchards will be donated to public
a global energy-management packaging serves many important
Germany, plant sends zero waste to schools in low-income areas
program to promote conservation, functions, such as protecting our
landfill, and our London, Ontario, throughout the U.S. to provide
manage energy use, and investigate products, maintaining freshness and
Canada, plant is not far behind,
energy savings opportunities, providing a means to communicate
with more than 95% of the waste
including alternative fuels and to consumers.
generated onsite sent for recycling.
Using advances in technology, our
In the U.S., Kellogg joined the packaging team has proactively
Environmental Protection Agency’s minimized packaging, reduced
(EPA) Climate Leaders program, liner weight and paperboard
a voluntary government-industry quantity by millions of pounds
partnership designed to measure
Senior Vice President
Global Innovation and Chief
We partner with organizations to
provide funds, food and other resources
to help improve people’s lives.
Corporate Social Responsibility Opportunities for Minorities and
As part of Kellogg’s support partnership with the organization in
2005 as part of its Earn Your Stripes
Women. Kellogg values
in Mexico, Kellogg Mexico
participated in a food collection individuals for their diverse initiative. The national partnership
organized by the Mexican backgrounds, cultures and encourages girls ages 8 to 13 to be
As a responsible corporate citizen, Kellogg’s Swim Active. An
Association of Food Banks (AMBA). experiences. We support more active, eat right and live a
Kellogg Company invests in the innovative Kellogg program is
The national collection was minorities and women through balanced and healthy lifestyle.
communities where we have increasing access to swimming
called “X un México sin hambre” organizations and programs that
significant operations. We partner facilities for youngsters in the
Building Stronger Communities.
(For a Mexico without hunger). encourage excellence and provide
with organizations to provide United Kingdom. Kellogg’s Swim
Employees from Kellogg Mexico, opportunities. These include: We strive to make a difference in
funds, food and other resources Active, a three-year partnership
together with their friends and the communities where we operate.
to help improve people’s lives. In between Kellogg and the Amateur
NAACP Law Fellows Program.
families and Kellogg suppliers, We support organizations that
keeping with our company’s more Swimming Association, sets up
Through the NAACP Law Fellows
collected more than 140,000 work to strengthen communities
than 100-year heritage of nutrition projects that provide primary school
Program, Kellogg supports summer
pounds of food for the Food Bank by addressing economic and
leadership, our most important children and their families with
in Queretaro. fellowships for students who have social development issues.
corporate-giving priority is nutrition easier access to swimming facilities.
completed at least one year of law
education and physical fitness.
Joint Aid Management. Kellogg United Way. Kellogg is a long-
school to work at the NAACP’s
In addition, we support programs America’s Second Harvest. Kellogg
time supporter of United Way.
is partnering with South Africa- National Legal Department. The
that improve opportunities for has an extensive partnership
based Joint Aid Management law fellows work with civil rights In 2007 Kellogg pledged a total
minorities and women and build with America’s Second Harvest,
Company’s donation will help the
(JAM) to develop Health Is Vital, a attorneys on issues such as criminal of $4.65 million to campaigns
stronger communities. Since the nation’s largest charitable
YMCA improve the way it works
nutritional intervention program justice, education, housing, voting that will benefit 26 communities.
2003, Kellogg has contributed hunger-relief organization. Each
with health seekers and their
for people living with HIV/AIDS. rights and environmental justice. In addition, more than 1,500
more than $40 million in cash year Kellogg donates nearly
families, and with school-age youth
This program will provide a stable volunteers participated in service
and $120 million in products $25 million of food products,
in YMCA child-care programs.
Girls on the Run®. Kellogg supports
supply of food to strengthen the projects as part of Days of Caring.
to charitable groups around which are distributed through the
Girls on the Run in its efforts to United Way recently recognized
bodies of those on anti-retroviral
the world. organization’s network of more than
In addition, 24 YMCAs received
treatment, while also increasing the provide experiential learning Kellogg Company with the Spirit
200 food banks and food-rescue
grants to provide physical activity
effectiveness of the treatment. programs that help enhance of America Corporate Community
Nutrition Education and Physical organizations. America’s Second
programs for underserved youth
self-esteem in young girls. Kellogg’s Investment Summit Award.
Fitness. As a company that Harvest recognized Kellogg with the
in communities where Kellogg
Frosted Flakes launched a three-year
produces food products and Group Volunteer Service of the Year
operates. The Kellogg’s Opportunity
promotes eating well and healthy award in 2007.
to Play grants helped fund activities
living, our commitment to nutrition from basketball to wall climbing in
education and physical fitness The Global FoodBanking
11 U.S. states.
Network™. In 2007 Kellogg became
includes providing food donations
and funds to partner organizations. a founding partner of The Global
Action for Healthy Kids. Kellogg
Organizations and initiatives we FoodBanking Network. Funds
partners with Action for Healthy
support include: provided by Kellogg will further
Kids to decrease the incidence of
support our commitment to hunger-
obesity in children by improving
YMCA of the USA. Kellogg relief efforts around the world and
nutrition and increasing physical
Company has contributed funds will particularly assist with food-
activity in schools. Kellogg has
to support Activate America, the banking development projects in
provided grants to help implement
YMCA’s response to the nation’s Mexico, Guatemala and
mandated wellness policies at
growing health crisis. Kellogg South Africa.
public schools in 11 U.S. states.
Celeste A. Clark* Gary H. Pilnick* Margaret R. Bath*
Senior Vice President Senior Vice President Vice President
Global Nutrition and General Counsel Research, Quality and
Corporate Affairs and Secretary Technology
Bradford J. Davidson* Ronald L. Dissinger
Juan Pablo Villalobos*
Senior Vice President Vice President
President, U.S. Snacks Chief Financial Officer,
Senior Vice President
Kellogg North America
Executive Vice President,
Timothy P. Mobsby*
Senior Vice President
James M. Jenness* Donna J. Banks* Latin America Vice President
Executive Vice President,
Chairman of the Board Senior Vice President Kellogg International
Kathleen Wilson- France/Benelux/Central
Global Innovation and President, Kellogg Eastern Europe/Russia
A. D. David Mackay* Chief Environmental Europe
Officer Senior Vice President
Board of Directors
Michael J. Libbing
Chief Executive Officer Global Human (from left to right)
Paul T. Norman*
Jeffrey M. Boromisa* Vice President
Senior Vice President Corporate Development
of Directors Senior Vice President John T. Dillon Dorothy A. Johnson Ann McLaughlin Korologos
A. D. David Mackay
President, U.S. Alan R. Andrews
Executive Vice President, (A*,C,E,N) (S*,E,M) (C,E,N,S)
Morning Foods Gregory D. Peterson
John A. Bryant* Kellogg International Vice President Retired Chairman and President, Chairman of Board of Trustees,
Executive Vice President Chief Executive Officer, Ahlburg Company RAND Corporation
Corporate Controller Chief Executive Officer,
David J. Pfanzelter*
Asia Pacific International Paper Company
Managing Director, Kellogg Company
Chief Financial Officer President Emeritus, Elected 1989
Senior Vice President Kellogg United Kingdom Elected 2000 Council of Michigan Foundations Elected 2005
Ruth E. Bruch* President, Kellogg
North America Elected 1998 Gordon Gund
Specialty Channels Joel R. Wittenberg
Senior Vice President Claudio X. Gonzalez Robert A. Steele (N*,C,E,M)
Jeffrey W. Montie* Vice President
Chief Information James M. Jenness
(M*,C,E,N) (A,M) Chairman and Chief
Officer Treasury and
Executive Vice President Chairman and (E*) Executive Officer,
President, Kellogg Chief Executive Officer, Gund Investment Corporation
Global Health and Well-Being,
Chairman of the Board,
International Kimberly-Clark de Mexico Procter and Gamble
Kellogg Company Elected 1986
Elected 1990; Retiring Elected 2007
John L. Zabriskie, Ph.D.
*Member of Global Leadership Team
Donald R. Knauss
Benjamin S. Carson, Sr., M.D. (C*,A,E,N)
Note: Italicized type denotes subsidiary or other subtitle Sterling K. Speirn
(M,N,S) Co-Founder and Partner,
Lansing Brown Investments, L.L.C.
Professor and Director of
President and CEO, Chief Executive Officer,
Pediatric Neurosurgery, Elected 1995
W. K. Kellogg Foundation
Global Leadership Team, from left to right: Paul Norman, Margaret Bath, Donna Banks, Jeff Montie, Jeff Boromisa, Kathleen Wilson-Thompson, The Clorox Company
The Johns Hopkins Medical
Jim Jenness, David Mackay, John Bryant, Tim Mobsby, Ruth Bruch, Dave Pfanzelter, Juan Pablo Villalobos, Brad Davidson, Gary Pilnick and Celeste Clark Elected 2007 Institutions Elected 2007
Committees A = Audit C = Compensation E = Executive M = Consumer Marketing N = Nominating and Governance
S = Social Responsibility *Committee Chair