The Company. Kellogg Company, incorporated in Delaware in 1922, and its subsidiaries
are engaged in the manufacture and marketing of ready-to-eat cereal and convenience
foods. Principal Products. The principal products of the Company are cookies,
crackers, toaster pastries, cereal bars, frozen waffles and meat alternatives.
These products were, manufactured by the Company in 17 countries and marketed
in more than 180 countries. The Company’s cereal products are generally marketed
under the Kellogg’s name and are sold principally to the grocery trade through
direct sales forces for resale to consumers. The Company uses broker and distribution
arrangements for certain products. It also generally uses these, or similar arrangements,
in less-developed market areas or in those market areas outside of its focus.
The Company also markets cookies, crackers, and other convenience foods, under
brands such as Kellogg’s, Keebler, Cheez-It, Murray, Austin and Famous Amos,
to supermarkets in the United States through a direct store door (DSD) delivery
system, although other distribution methods are also used.
Agricultural commodities are the principal raw materials used in the Company’s
products. Cartonboard, corrugated, and plastic are the principal packaging materials
used by the Company. World supplies and prices of such commodities (which include
such packaging materials) are constantly monitored, as are government trade
policies. The cost of such commodities may fluctuate widely due to government
policy and regulation, weather conditions, or other unforeseen circumstances.
Continuous efforts are made to maintain and improve the quality and supply of
such commodities for purposes of the Company’s short-term and long-term requirements.
The principal ingredients in the products produced by the Company in the United
States include corn grits, wheat and wheat derivatives, oats, rice, cocoa and
chocolate, soybeans and soybean derivatives, various fruits, sweeteners, flour,
shortening, dairy products, eggs, and other filling ingredients, which ingredients
are obtained from various sources. Most of these commodities are purchased principally
from sources in the United States.
Customers. The Company’s largest customer is, Wal-Mart Stores, Inc. and its
affiliates.
Competition. The Company has experienced, and expects to continue to experience,
intense competition for sales of all of its principal products in its major
product categories, both domestically and internationally. The Company’s products
compete with advertised and branded products of a similar nature as well as
unadvertised and private label products, which are typically distributed at
lower prices, and generally with other food products. Principal methods and
factors of competition include new product introductions, product quality, taste,
convenience, nutritional value, price, advertising, and promotion.
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