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Kellogg separating into 3 companies focusing on snacks, cereal and plant-based foods

admin by admin
June 21, 2022
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Kellogg separating into 3 companies focusing on snacks, cereal and plant-based foods
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Kellogg Plans to split into three independent public companies and its iconic brand into separate snack, cereal and plant-based businesses.

The company’s stock rose 8% in pre-market trading, but closed only 1.9%.

Tuesday’s announcement is 10 years after Kellogg’s purchase of Pringles for $ 2.7 billion, focusing on the global snack business, where people eat more and more often between meals. Shows the company’s shift to.With rivals like Kellogg, Frito-Lay owner PepsiCo When Oreo cookie owner Monderes, By introducing more snacks and launching smaller brands, we are trending. On Monday, Mondelez announced that it would buy Clif Bar for $ 2.9 billion.

In the United States, in contrast, grain sales are stagnant as people eat on the go and seek different options in the morning. Brands such as Special K, Froot Loops and Rice Krispies have been the foundation of Kellogg’s for decades, but are no longer considered the company’s major growth driver. Pandemics temporarily revived the cereal category as more consumers began to eat breakfast at home, but Kellogg expects North American cereal business revenues to level off in the future.

Consumer Edge analyst Jonathan Finney said, “People who were worried about a zero-duplicate deal with Pringles in 2012 should no longer hurt. It was North America that didn’t fit management’s plans. It’s a legacy business, and today’s announcement will make it final. ” Attention to the client.

Kellogg has been considering spin-offs as a potential strategy since 2018, executives told investors in a conference call to discuss Tuesday’s announcement. CEO Steve Cahillane said all three businesses could be “significant” independent, but the company is looking for alternatives, including the potential sale of plant-based businesses.

Kellogg’s plant-based division and North American cereal business together accounted for about 20% of the company’s revenue last year. The remaining businesses include snacks, noodles, international cereals and North American frozen breakfast brands.

The tax exemption spin-off is expected to be completed by the end of 2023.

The name of the new company has not yet been decided, and the two spin-off management proposals will be announced by the first quarter of next year. Cahillane will continue to be the CEO of a global snack company.

The business housed brands such as Pringles, Cheese It, Pop-Tarts and RXBAR and reported revenue of $ 11.4 billion last year. About 10% of these sales come from the growing noodle business in Africa, and the remaining 10% come from the ego waffles and their frozen breakfast business. North America will account for almost half of the company’s revenue.

Snack-focused companies are also considering adding to their portfolio through acquisitions, according to Cahillane.

The North American cereal company proposed last year had sales of $ 2.4 billion. In the short term, spin-offs will focus on recovering from supply chain turmoil and regaining lost market share. Kellogg expects to generate stable long-term profits as an independent company while improving profit margins.

“This is a fairly stable business and is a bit declining,” Cahillane told CNBC’s Sara Eisen. “Squawk Box” Following the announcement, he added that he expects further innovation and brand building from spin-offs as the brand does not have to compete with Pringles or Cheez-It for resources.

Kellogg’s plant-based division uses Morningstar Farm as its anchor brand. Last year, the business had sales of $ 340 million.When completed, the spin-off will provide investors with another plant-based equity play Beyond MeatIt hasn’t made a quarterly profit in almost three years, and its share price has fallen 63% this year.

3 The business headquarters remains unchanged. Both North American cereal companies and plant-based food spin-offs are located in Battle Creek, Michigan. Global snack companies have their headquarters in Chicago and another campus in Battle Creek.

Kellogg has not yet decided how to distribute the dividend to the three companies, Cahillane told CNBC.

Read the full press release here.

Tags: Beyond Meat InkBreaking News: BusinessBusiness newscerealChicagocompaniesEating and drinkingfocusingfoodsKelloggKellogg'sLtd.Mondelez International Co.PepsiCo Co.PlantbasedRetail industryRevenueseparatingsnackswork
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