The Kellogg Company recently announced that its board of directors approved a plan to separate its North American cereal and foods businesses into three independent public companies, respectively focused on snacks, cereals, and plant-based foods.
"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 CEO, in a statement. "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."
According to the company, as separate entities, all three businesses will be better able to:
• Focus on their own strategic priorities, with financial targets that best fit their markets and opportunities,
• Execute with increased agility and operational flexibility, enabling more focused resource allocation,
• Realize improved outlooks for profitable growth,
• Shape distinct corporate cultures.
The names of each company are yet to be determined, however, each of their strategic goals is outlined. The global snacking company will incorporate Kellogg’s three international regions: Europe; Latin America; and Asia Pacific, Middle East, and Africa. Focused on growth, the new company will concentrate on brand building, innovation, and international expansion.
The North American cereal company will also center itself on growth; however, it will also devote energy to retaining category share and restoring and expanding profit margins likely affected by COVID-19 and recent global events causing supply chain disruptions.
In addition to growth, the plant company will put resources and investments toward strong category prospects by building brand awareness and penetration in North America, with plans to expand internationally.
Each company has accumulated a large market share in their respective categories; the snacking brand led the industry with an estimated $11.4 billion in net sales in 2021, followed by the cereal brand which made about $2.4 billion in the same year, trailed by the plant-based company (currently MorningStar Farms) which made $340 million in net sales last year.
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