Kellog's plans to build a subscription snack services that would deliver healthy snack boxes customized according to clients' taste.
Subscription-based services that bring personalized snack packages to people's home weekly or monthly have been trending for the past few years with food start-ups offering a range of affordable snack boxes to small communities, such as Steepster, Yogi Surprise, Mouth, and Nature Box. The popular cereal manufacturer Kellogg's announced this month that they would be entering this arena to save its failing revenue.
Bloomberg said that Kellogg's has invested an undisclosed sum to monetize a snack subscription service that would deliver healthy food to people's doorstep.
"Kellogg has assembled a team and invested capital to create the direct-to-consumer food business, said the people, who asked not to be identified because the plans aren't public," Bloomberg reported.
Bloomberg further said that Kellogg's decision follows its biggest rival-General Mills-attempt to penetrate this niche with its creation of Nibblr.
By sending carefully portioned and personalized snacks to customers weekly, General Mills' Nibblr aimed to provide Spotify-like snack services to America. However, it closed down after a year and a half. General Mills told Bloomberg that Nibblr "provided great learning."
Despite Nibblr's demise, Kellogg's won't be the only big player in the online snack subscription service scene; Time said that Graze would be its toughest competitor.
A UK-based food subscription company, Graze is one of the largest snack subscription providers today with 1,000 new customers signing up every day. Definitely, Kellogg's must offer more than pop-tarts and cereals in their snack boxes to beat existing competition.
Seeking Alpha is dubious about the move, saying that it would take a long time before Kellogg's planned snack subscription service boosts their revenue.
"The cereals industry is likely to remain under pressure during 2015 and Kellogg's management expects the same," said investment research company Seeking Alpha.
