Kellogg's 1964 Annual Shareholder Letter - The Pop Tart Release
The Year of The Pop Tart
L.C. Roll
Chairman/President/General Manager
TO OUR SHAREHOLDERS
On behalf of the Board of Directors, it is a pleasure to report on another successful year for Kellogg Company. This is the thirteenth consecutive year the company has achieved favorable increases in sales and earnings.
SALES AND EARNINGS
Consolidated net sales reached a new high of $349,083,439 in 1964, which is 9% above the record set the previous year. Consolidated net earn- ings rose 16% over net earnings in 1963 to a total of $32,614,921. After allowing for payment of Pre- ferred Dividends in 1964, net earnings per share of Common Stock came to $1.81, compared to $1.56 per share in 1963.
DIVIDENDS
Kellogg Company paid an aggregate of $18,100,230 in dividends on Common and Preferred Stock to its stockholders in 1964. This is an increase of $2,570,736 over the amount paid in 1963. In November the Board voted in favor of a year-end extra dividend which raised the total dividend per share of Common Stock to $1.00 for 1964.
In each of the last eight years the Board approved an increase in annual dividends. As shown in another section of this report, the company paid its shareholders a total of $113,338,206 from net earnings during the last ten years.
In 1964 total dividends amounted to 55% of net earnings. This is in keeping with our policy of paying over 50% of net earnings in dividends each year.
We plan to continue our current dividend policy, using the balance of net earnings for increased working capital and the further expansion of our business.
INTERNATIONAL OPERATIONS
During the year 1964 the company acquired by purchase an additional 30,154 shares of Preferred total of 89,560 shares is now held in Treasury to meet the repurchase provision which requires that we redeem 3,750 shares each year.
The shares now held in Treasury will take care of this requirement for the next twenty-four years.
Early in 1964 we began the production of Kellogg products in the new plant of Kellogg (Deutschland) GmbH in Bremen, Germany, a wholly-owned German
subsidiary of Kellogg's of Great Britain. Reis und Handels-A.G., the German company in which we own 79.75% of the capital stock, as previously reported, continues the production and marketing of its products.
Other Kellogg products were also produced for the first time in various Kellogg facilities in 1964.
Chief among them were: Sultana Bran, Froot Loops and Seasoned Corn Flake Crumbs in Australia; Froot Loops in Canada; Sugar Pon in Japan; Snack-Pak and Seasoned Corn Flake Crumbs in South Africa; Sugar Smacks and a Variety Pack in Mexico. In Great Britain, we launched a new 16 oz. package of Corn Flakes and a large size Sugar Smacks.
Froot Loops was also introduced in British test markets during the year.
We plan to continue expanding the range of Kellogg products in major overseas markets as fast
as consumer demand warrants. All in all, we are pleased with the progress being made overseas and anticipate the further growth of our operations in important world markets.
RESEARCH AND DEVELOPMENT
During 1964 we accelerated our efforts to improve our processes and develop new products. Kellogg's Pop Tarts, a pre-baked pastry with four fillings which requires no refrigeration and can be pre-heated in a toaster or served right from the package, is one of the new products we introduced in test markets last fall.
The results of this introduction have been very encouraging and distribution of this product is now being extended to other areas.
Our newest cereal product, Kellogg's Corn Flakes with Instant Bananas, was developed after many months of intensive research on freeze-dried fruits. This product is now being tested in consumer markets.
While it is too soon to say how successful it will be, we think it has considerable potential, largely because of its convenience and the popularity of fruit and cereal combinations.
Early in the year we introduced a new plastic package in the shape of a cereal bowl, with a disposable top. This package holds a generous serving of cereal and is designed chiefly for institutional use. It has enjoyed favorable acceptance from the start.
These represent only a few of the projects in which our research and development teams are now engaged. In our determination to provide the public with more Kellogg products of highest quality, we are constantly increasing our technical staffs and making fuller utilization of our new Research Center in Battle Creek.
CAPITAL IMPROVEMENTS
Last year we announced plans for broad expansion and improvement programs at all of our plants. These programs are proceeding according to schedule. Our most important domestic program involves the construction of a new plant at Omaha, Nebraska.
The building is nearly finished. When it is ready for operation, it will be equipped to produce various Kellogg products. The original Omaha plant was limited primarily to the production of pre-sweetened cereals.
In England a new building was constructed during 1964 to accommodate the expansion of production at the Manchester plant. Another building, designed to facilitate processing and packing operations, is now under construction there.
In Australia the production capacity of our Sydney plant was increased and a new warehouse is under construction.
In Canada a new finished goods warehouse was completed which should help us meet heavier sales requirements and improve customer service.
In South Africa and Venezuela existing production facilities were modernized and new warehouses were built.
As a result of advanced technology, all of our domestic and overseas plants benefit from constant improvements in our processing, printing, packaging and shipping operations.
During the past ten years we have reinvested $122,449,167 in new equipment and plant expansion programs.
During the next five years we plan to allocate another $90,000,000 for other programs of this nature. These future capital programs will be financed from retained earnings.
PERSONNEL CHANGES
On July 20, 1964 Norman Bristol was elected General Counsel. He succeeded E. L. Harding, Senior Vice President, who retired as an officer of the company at the end of 1964 after 26 years of dedicated service. Mr. Harding will continue to serve in a consulting capacity and as a director of the company.
In November, E. M. Leaver and E. O. Orchard were promoted to Senior Vice Presidents. These two officers have contributed outstanding service to the company for many years.
E. J. Harlan, who had been associated with the company for 41 years in Mexico and Latin America, retired as Chairman and President of Kellogg de Mexico, S.A. de C.V. late in December. Emil Jimenez was elected to succeed him as President and General Manager of the Mexican Company.
Earlier in the year G. D. Robinson, President and General Manager of Kellogg Company of Canada, Limited, was elected Chairman and President of our Canadian Company.
During the year it was announced that W. C. Nicolson, who was Vice President and Sales Manager of the Canadian Company, would be transferred to Australia as Assistant Managing Director and Marketing Manager.
Mr. Nicolson assumed his new duties on February 1, 1965.
For many years our worldwide management has been training key men to assume new responsibilities. within our organization. Efforts along this line have always proved rewarding and we are convinced that it is an essential part of our responsibility to perpetuate the brand of leadership that has made our company strong.
LOOKING AHEAD
Kellogg Company's prospects for growth never looked brighter. With the continued support and cooperation of Kellogg people in every area where we are doing business, I am confident that we can make our long-range goals a reality.
Sincerely,
Chairman and President
February 24, 1965
Kellogg Company 1964 Annual Shareholder Letter: Celebrating the Birth of Pop-Tarts
Introduction
In 1964, the Kellogg Company introduced one of its most influential products, the Pop-Tart. This breakthrough was highlighted in their annual shareholder letter, marking a pivotal moment in both the company's history and the convenience food industry.
The release of Pop-Tarts not only revolutionized breakfast habits but also solidified Kellogg’s position as a market leader in ready-to-eat foods.
The Impact of Pop-Tarts on Kellogg’s Business Strategy
The 1964 shareholder letter underscored Kellogg's innovative approach to expanding its product line beyond cereals.
The introduction of Pop-Tarts aligned with Kellogg's strategy to diversify its offerings and tap into new consumer markets craving convenience and flavor variety. This strategic move enhanced Kellogg's brand visibility and fueled its growth in the competitive food industry.
Cultural Significance and Lasting Popularity
Pop-Tarts have not only become a beloved snack across generations but also a cultural icon. The product’s significance is such that it inspired Jerry Seinfeld’s 2023 movie Unfrosted.
The film explores the humorous and somewhat fictionalized backstory of how Pop-Tarts were invented, bringing to light the creative processes behind this iconic snack. Seinfeld’s interest in the subject highlights the enduring appeal and impact of Pop-Tarts on popular culture.
Conclusion
The 1964 Kellogg Company Annual Shareholder Letter is more than just a piece of corporate communication. It represents a landmark event in the history of food products, setting the stage for future innovations.
With the release of Pop-Tarts, Kellogg not only changed the landscape of morning breakfast routines but also launched a product that would become a fixture in American pop culture, as celebrated in Jerry Seinfeld’s Unfrosted.
Explore the origins and legacy of Pop-Tarts and their impact on both Kellogg's and the wider world.
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