Kellogg Company set to split into three businesses, as its snacks activity grows
pic: Neill Barston
The Kellogg Company has confirmed approval of a plan to separate its North American cereal and plant-based foods businesses, into three distinct companies, reports Neill Barston.
As the firm noted, the move comes amid its growing drive to enhance its snacking category presence, with the separation proposals set to enhance its overall operations.
Kellogg recently made a prominent appearance at this year’s Sweets & Snack Expo, displaying a broad range of product, including snacks offerings (see main image).
The company has yet to confirm the new name for its three businesses, which include its “Global Snacking Co.”, with about $11.4 billion in net sales, including international cereal and noodles, and North America frozen breakfast.
It will also include its “North America Cereal Co.”, with about $2.4 billion* in net sales, playing a leading role in the US, Canada, and Caribbean, with a portfolio of iconic, established brands.
Thirdly, its Plant Co.”, with about $340 million* in net sales, will be a leading, profitable, pure-play plant-based foods company, anchored by the MorningStar Farms brand, with a significant opportunity to capitalise on strong long-term category prospects by investing further in North America penetration and future international expansion.
“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value. This has included re-shaping our portfolio, and today’s announcement is the next step in that transformation,” said Steve Cahillane, Kellogg Company’s Chairman and Chief Executive Officer.
“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities. In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”
Strategic Rationale
In recent years, the company has transformed its portfolio into one that has expanded geographically and shifted toward growing businesses, particularly in snacking categories. To achieve this, it has directed resources and investments toward growth categories and markets around the world, made several acquisitions and partnerships in emerging markets, and strengthened its snacks business through acquisitions, divestitures, and the freeing up of resources by exiting from direct-store delivery.
The successful execution of these actions has expanded Kellogg’s portfolio, resulting in a scaled global snacking business and significant emerging markets presence, complemented by strong and profitable breakfast and plant-based foods businesses. The outcome of these strategic actions has been improved growth in recent years, with momentum sustained into 2022.
After several years of transformation and improving results, the Company believes it is the right time to separate these businesses so they may pursue their particular strategic priorities.