Kellogg's is splitting into three separate companies
The split will allow for more individual focuses on its cereals, snacks, and plant-based foods.
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Kellogg’s announced recently that it will take steps into separating itself into three independent companies.
In the split, the brand will individually showcase its respective snacking, cereal and plant-based foods.
Its cereals include Kellogg’s, Frosted Flakes, Raisin Bran, Rice Krispies and Corn Flakes, among others; its snacks include Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats and Nutri-Grain, among others; and its plant-based foods are anchored by the MorningStar Farms brand.
The three new company names will be determined and announced at a later date, however the breakdown will be as follows:
- “Global Snacking Co.” will be a leading company in global snacking, international cereal and noodles, and North America frozen breakfast with iconic, world-class brands and strong underlying growth momentum and profitability
- “North America Cereal Co.” will be a leading cereal company in the U.S., Canada and the Caribbean with a portfolio of iconic, world-class brands and compelling opportunities for investment and profit growth
- “Plant Co.” will be a leading, profitable, pure-play plant-based foods company anchored by the MorningStar Farms brands with opportunities to capitalize on strong prospects for future international expansion
In the press release announcing the split, Kellogg Company Chair and CEO Steve Cahillane noted the company “has been on a successful journey of transformation to enhance performance and increase long-term shareowner value.”
This has included re-shaping its portfolio. The split marks the next step in that transformation.
“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,” Cahillane added.
According to Kellogg’s executive, as independent companies, all three businesses will be better positioned to focus on their distinct priorities, with financial targets that best fit their own markets and opportunities; execute with increased agility and operational flexibility; realize improved outlooks for profitable growth; and shape distinctive corporate cultures.
In 2021, Kellogg’s had net sales of $14.2 billion, with $11.4 billion generated by its snack division. Its cereal division accounted for $2.4 billion in sales, while its plant-based sales totaled around $340 million.
In late 2021, about 1,400 Kellogg’s union workers in plants across four US states — Michigan, Nebraska, Pennsylvania and Tennessee — went on strike, asking for more livable wages and better benefits amid contract expirations and accusations of job offshoring.
After two-and-a-half months on strike, Kellogg’s union workers agreed on a new five-year contract that includes wage increases and cost-of-living adjustments, and expansions in both healthcare and retirement benefits.
It has not yet been reported how workers will be impacted when the split eventually takes effect.
As it pertains to its headquarter locations, not much will change.
The cereal and plant companies will remain headquartered in Battle Creek, Michigan, while the snacking company will maintain dual campuses in Battle Creek and Chicago, Illinois, while its corporate headquarters will be located in Chicago. Kellogg’s three international regions’ headquarters in Europe, Latin America and AMEA will remain in their current locations.
The split is expected to be completed by the end of 2023.