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## U.S. Retail Cereal 

Our U.S. Retail Cereal business had another outstand- ing year in 2003. It posted net sales growth of 7%, even though it compared with a similarly strong 6% gain in 2002. This growth on top of growth led to a fourth consecutive year in which we increased our share of the U.S. cereal category. That we can contin- ue to grow in a category considered to be fully devel- oped is a testament to the power of brand building in this business. 

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In 2003, we continued to both increase and improve our advertising and consumer promotions in this business. Strong advertising campaigns lifted several brands, such as Froot Loops ® and Rice Krispies ® . Apple Jacks ® grew when children voted to add blue “carrots“ to the cereal. Disney ® toys in the box helped drive growth in Kellogg’s Frosted Flakes ® and Smacks ® . A weight-loss campaign again lifted sales for Special K ® and Special K ® Red Berries. We launched promotional cereals and inserts tied to popular movies like the “Cat In the Hat”, and holiday-themed versions of brands like Rice Krispies . 

We also benefited from new products. Fruit Harvest TM , Tony’s Cinnamon Krunchers TM , and Smorz TM were new brands launched early in the year, followed by brand extensions like Maple & Brown Sugar Frosted Mini- Wheats ® , and Special K ® Vanilla Almond. Our Kashi ® natural cereal brand continued its strong growth, aided by new products like Organic Promise TM Autumn Wheat TM , and Seven in the Morning TM ; the latter serves up a nutritional seven grains, seven grams of protein, and seven grams of fiber per serving. 

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These are all examples of bringing excitement to the category, adding value for the consumer, and contribut- ing positively to our key Volume to Value metrics. Our sales force continued to execute well at the store level, as our in-store representatives were successful at reduc- ing out-of-stock products and increasing feature and display activity. The combination of all these efforts led to sales and share momentum in our U.S. cereal busi- ness and reaffirmation of Kellogg Company’s position as a key partner to our retailer customers. 

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