August 4, 2008

Kellogg Snaps Up Space in New Warehouse

By Heerwagen, Peter

Washington County has landed a rapidly growing unit of Kellogg Company, a Fortune 500 company that is also the largest cereal maker in the United States.

Kellogg's Snack Division has signed a long-term lease for a distribution center in the Hunter's Green II Business Park on Newgate Boulevard, west of Hagerstown. Expected to open this month, it will employ between 35 and 50 workers as part of the division's new DSD (direct store delivery) system.

Battle Creek, Mich.-based Kellogg will use 215,460 square feet of a 554,000-square-foot facility owned by Malvern, Pa.-based Liberty Property Trust.

The project is utilizing "green" construction methods under The Leadership in Energy and Environmental Design (LEED) Green Building Rating System developed by the U.S. Green Building Council.

"Washington County's ability to fast-track the construction of the building was imperative to us securing this deal," said Troy Briggs, director of leasing and development for Liberty Property Trust, in a release. "Liberty at Hunter's Green provides Kellogg's with a state-of-the-art, Class A warehouse in a desirable business location."

According to an employment advertisement, Kellogg is looking for driver/warehouse employees in Hagerstown to distribute cookies and crackers to retailers in the Maryland, Pennsylvania, Virginia and Washington, D.C., areas. They will operate forklifts, pick orders, load trucks and deliver products to local grocery accounts.

In 2001, Kellogg purchased Keebler Company, the second largest manufacturer of crackers, cookies and snacks, for $4 billion. Washington County is now benefiting from the closure of former Keebler warehouses in Manassas, Va., and Mechanicsburg, Pa., and their consolidation into the new building at Hunter's Green.

Kellogg has been aggressively marketing its snack business, which has driven the need for more warehouse space, and Hagerstown is about halfway between the two Keebler locations.

Last fall, Kellogg announced it was doubling the size of its snack division plant in Cary, N.C., where it makes Cheez-lt crackers, Zoo animal crackers, and Austin cookie and cracker sandwiches.

"New innovations and product packaging, strong brand building support and excellent instore execution are driving growth of Kellog's Snacks Division," said spokesperson Thuy-An Wilkins. "For example on the innovation front, we've introduced a number of exciting snacks to the marketplace since January, including Cheez- It Duoz crackers, Keebler Fudge Shoppe Fudge Filled cookies, Special K Bliss bars, Town House Flipsides crackers, Murray Sugar Free Chocolate Bites cookies and 100 Calorie Right Bites Cheez-It party mix."

In its 2007 annual report to shareholders, Kellogg said, "North American Retail Snacks had a very good 2007. Our business, consisting of cookies, crackers, wholesome snacks, fruit-flavored snacks and toaster pastries, lapped strong twoyear growth rates by building on 11% in 2006 and 7% in 2005. We posted 7% internal sales growth to finish the year.

"We're able to maintain sustainable growth bybuilding existing brands and targeting innovation by utilizing our direct store delivery distribution system. Recently, the Advantage Group Performance Monitor rated the Kellogg DSD system number one among all snack food companies.

"We increased advertising at a double-digit rate and had a particularly good innovation year with portion-controlled packs. In 2006 we introduced 100 Calorie Right Bites packs in Cheez-It, Keebler Fudge Stripes and Chips Deluxe. We built upon these successes in 2007 by introducing Right Bites Fudge Sboppe Grasshopper and assortment packs."

At one time the nation's largest cookie and cracker company also had a distribution presence in Washington County.

Five years ago, Nabisco, Inc., now part of Kraft Foods, Inc., left a warehouse on South Conococheague Street in Williamsport, where it employed 12 workers delivering crackers and cookies to grocery stores and wholesalers.

Copyright News for Business, Inc. Jul 2008

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