Kellogg sets up European HQ in Ireland

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US cereals and snacks group Kellogg is to centralise its European
operations in a new office in Ireland, giving it a major presence
in the market with the world's highest per capita consumption of
ready-to-eat cereals, writes Sibonelo Radebe.

The central office, which will support Kellogg's four manufacturing sites in Europe and distribution activities, also underlines the company's long-term plans for growth in Europe.

Europe accounts for more than 20 per cent of Kellogg's annual revenue, quoted at $8.8 billion in 2003.

"The decision fits into Kellogg's long-term strategy to consolidate its position and pursue growth in Europe,"​ said Chris Wermann, director of Kellogg corporate affairs in Europe.

Ireland also boasts one of the lowest corporate tax rates in the world (12.5 per cent) and will offer a cost-efficient operating environment.

Kellogg's European operations have been largely limited to Western European countries with Britain leading the pack followed by Germany France, Spain, Ireland, Italy and the Nordic countries.

But while Eastern Europe, where disposable incomes are lower, still represent virgin ground for the US cereals giant, Kellogg may want to review its strategy in the near future. The 2004 expansion of the EU adds a further 10 states with a total population of about 100 million potential consumers.

Europe therefore offers growth opportunities lacking in Kellogg's home market, where increased competition, shrinking population growth and changing consumption trends away from many traditional foods have put pressure on North American sales.

Between 1992 and 2000, Kellogg's sales stagnated around the $6 billion mark. It produced slight annual growth between 2001 and 2003 partly from introduction of new products and also souring costs of raw materials.

"It is important that Kellogg is organised and structured in Europe to take advantage of the enlarged EU market opportunities and responds to the changing economic and commercial landscape,"​ noted Kellogg's regional president Tim Mobsby.

Related topics Ingredients

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