Kellanova Refocuses on Traditional Pricing and Promotions as Volume Growth Returns

Kellanova is aiming to reestablish a more typical business environment following years of supply chain disruptions, according to CEO and president Steve Cahillane on the company’s recent earnings call. 

To help drive growth, the company is leaning on innovations such as new flavors, health-oriented products and entirely new food platforms.

“The things that are going to drive these categories are innovation, brand building, quality display merchandising,” said Cahillane.

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In recent years, Kellanova relied heavily on pricing levers to combat inflation and other economic pressures. While cost inflation made price increases necessary, Cahillane said much of that “price discovery” has now taken place, and although consumers remain financially strained, they are beginning to adjust.

At the start of the year, promotional lifts were limited because price discovery was still ongoing. Now, as pricing begins to stabilize, Cahillane anticipates promotional investments will deliver returns similar to those seen before the pandemic.

As a result, Kellanova is returning to a more traditional commercial approach, including the reactivation of promotional activity that had been scaled back during supply bottlenecks. This, he said, should lead to a better balance between price, mix and volume in the North American market.