Special K Popcorn Chips from Kellogg

Zacks

Kellogg Company (K) recently introduced new low calorie popcorn chips, under its famous Special K snacks line. Special K Popcorn Chips are baked instead of fried and have a crunch. The popcorn chips come in two flavors, Butter and Sweet & Salty.

Each serving of 28 chips contains 120 calories. The launch of Special K Popcorn Chips comes on the heels of the Cracker Chips launch under the brand Special K.

The popular brand Special K targets the growing number of health conscious consumers who prefer the convenience of nutritious packaged food. Special K Popcorn Chips particularly capitalizes on the increasing awareness and need of healthy snacking options. There is a growing demand for healthy packaged food with all their nutritional values and taste intact.

Headquartered in Battle Creek, Michigan, Kellogg Company is the world's leading producer of cereals and holds solid market position for snacks and frozen foods. The company is gradually strengthening its snacks portfolio to reduce dependence on its mainstay cereal business which is currently struggling.

With the June 2012 acquisition of Procter & Gamble’s (PG) snack unit which included the iconic brand of potato snack, Pringles, Kellogg will be a strong player in the snacks business, second only to PepsiCo, Inc. (PEP). Further, we believe the Pringles buyout is likely to reduce Kellogg’s dependence on its cereal business, apart from adding an important brand to its already popular offerings of snacks like Keebler and Cheez-It.

Kellogg Company carries a Zacks #3 Rank in the near term (Hold rating). We currently have a Neutral recommendation on the stock.

We are bullish on the long- term prospects of the company due to its solid brand positioning, its geographic diversity and cost-saving initiatives. Particularly, we are encouraged by the growth potential, diversification and international presence that the Pringles deal provides.

However, Kellogg’s second quarter 2012 results have been soft, owing to top-line decline, commodity cost inflation and sluggish European results.

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