Kellogg's to split business in three companies that focus on snacks, cereal, and plant-based foods

Kellogg Company (Battle Creek, MI) has announced that it will be splitting its business into three companies that focus on cereals, snacks, and plant-based foods. According to a press release from Kellogg’s, the “Global Snacking Co” will focus on global snacking, international cereal and noodles, and North America frozen breakfast. The “North American Cereal Co” will focus on cereal in the U.S., Canada, and Caribbean, and the “Plant Co.” will be a “pure-play plant-based foods company, anchored by the MorningStar Farms brand.”

Snacks make up around 80% of Kellogg’s sales, with the snacking division, which makes products like Cheez-Its, Pringles and Pop-Tarts, generating $11.4 billion in 2021. Cereal accounted for another $2.4 billion in sales in 2021 while plant-based sales totaled around $340 million. The spinoff of the unnamed cereal and plant-based food companies should be completed by the end of next year.

"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," said Steve Cahillane, Kellogg Company's chairman and chief executive officer.

According to a report in the AP, CEO Steve Cahillane said on a conference call with investors that separating the businesses will make them nimbler and more capable of focusing on their own products, instead of competing for resources with the high-growth snacking business. On the other hand, Kellogg’s has spent years placing greater focus on its snacking business, which has been successful for the company. This makes the prospects of the cereal and plant-based food business less certain. For example, Kellogg’s said it would consider a sale of the plant-based food business. The category has seen years of strong, rapid growth, and is now highly competitive, but sales have plateaued in recent months.