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Kellogg looks to new adult breakfast offerings to boost segment sales

BY Alaric DeArment

BATTLE CREEK, Mich. — Cereal maker Kellogg Co. is hoping to appeal to adult customers with new breakfast food lines, the company said in announcing its first quarter 2013 earnings.

In a conference call with financial analysts, CEO John Bryant said the company plans to launch Raisin Bran with omega-3, multi-grain Special K and new additions to the Kashi brand later this year, citing lagging sales in the adult-products segment compared with products aimed at children.

Bryant also touted products designed to offer the nutritional value of cereal, but in more convenient forms, such as the Breakfast To Go shakes. "[When] you think about the weakness in the cereal category, we’re also doing things to give people the benefits of cereal outside that normal definition of ready-to-eat cereal," Bryant said during the call.

The company posted sales of $3.9 billion for the quarter, which marked a 12.2% increase over first quarter 2012. Profits were $311 million, a 13% decrease from last year. The company said it would meet its fiscal year 2013 guidance.

Sales for the North America segment were $2.6 billion, an 8.1% increase over first quarter 2012, including 1.6% sales growth for the breakfast foods segment in the United States and a 1.7% decline for the U.S. snacks segment, with the "North America Other" segment — which includes U.S. frozen foods and the company’s Canadian business — showing 7.4% sales growth.

"Results in the first quarter were broadly as we expected, and we’re pleased to have a solid start to the year," Bryant said in a statement. "We saw good comparable revenue growth in many regions around the world, and the Pringles business continued to post strong results."

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Arizona launches three new Rickeys beverage flavors

BY Jason Owen

WOODBURY, N.Y. — Arizona Beverages is adding three new Rickeys flavors, a beverage that combines a balance of sweet fruit and tart lime inspired by the Brooklyn original soda fountain novelty, the company announced this week.

The three new Rickeys flavors include: Mango Lime, Grape Lime and Lemon Lime Rickey. These flavors join Cherry Lime, an immensely popular drink, according to the company.

The new drinks contain 10% juice and only 70 calories per serving.

The line is easily identifiable on shelves with Cherry Lime Rickeys 20th Anniversary Design, created by contest winner Kenny Vidinich. The Lime Rickeys will be available nationwide with a suggested retail price of $.99 – $1.25 per 23-ounce can.


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CVS Caremark’s integrated model continues to prove successful in Q1 results

BY Antoinette Alexander

CVS Caremark executives were upbeat during last week’s conference call with analysts, as the company pulled in a “strong” first quarter and narrowed its 2013 guidance to reflect higher-than-expected performance.

The positive start to 2013 is important as it further demonstrates that CVS Caremark’s distinctive, integrated healthcare model is resonating and spelling success for this pharmacy innovation company.

“While CVS merely narrowed full year guidance despite the 1Q13 EPS beat, we remain confident that guidance will still prove conservative, as Maintenance Choice, ExtraCare, Pharmacy Advisor and MinuteClinic drive growth. CVS is on Citi’s Top Picks Live! list,” stated Citi Research analyst Deborah Weinswig in a research note.

During the conference call, CVS Caremark president and CEO Larry Merlo told analysts that it recently completed its client advisory forum, which represented an opportunity to spend time with about 800 clients. What did their clients have to say?

“Obviously, they are very focused on the implementation and administration of the changes resulting from the Affordable Care Act, while continuing to look for innovative ways to both lower costs and improve outcomes. And with our integrated breadth of assets across retail pharmacy, where we interact with five million customers a day, our PBM, as well as our MinuteClinics, we can engage with patients through our unique clinical programs to help drive better outcomes. And we are very well aligned with the goals of health reform and well-positioned to be an important part of the solution,” Merlo told analysts.

In fact, CVS Caremark saved clients more than $643 million in 2012 in their overall healthcare spend due to improved medication adherence for chronic conditions, and its Maintenance Choice and Pharmacy Advisor programs contributed to the improved adherence rates and cost savings.

Meanwhile, CareFirst BlueCross BlueShield announced early last week that it has entered into a three-year agreement with CVS Caremark to provide pharmacy benefits and other related services to its commercial and Medicare Part D members — 1.1 million CareFirst members, to be exact.

It is also important to note that the MinuteClinic business is increasingly playing a vital role as it develops wellness programs and programs aimed at monitoring clients with chronic conditions.

During the company’s Annual Analyst Day meeting in December, it was noted that non-acute services account for 16% of total MinuteClinic visits. Over the last three years, its non-acute services have grown at a compound annual growth rate of 41%, Andrew Sussman, SVP and associate chief medical officer of CVS Caremark and president of MinuteClinic, told analysts in December.

During its 2011 Annual Analyst Day meeting, Merlo talked about “innovation with a purpose — a purpose that defines why we exist as an organization.”

CVS Caremark is indeed innovating with a purpose — and it is resonating with clients and customers.
 

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