The breakfast cereal group Kellogg intends to concentrate primarily on snacks that promise higher growth rates in the future, and is therefore splitting off the stagnating business with cornflakes and meat substitutes. The news is well received on the stock exchange.
The cornflakes giant Kellogg wants to split into three companies. On the one hand, the stagnating North American business with cornflakes, rice krispies and other breakfast cereals is to be spun off, on the other hand, the business with vegetarian and vegan meat substitutes, which together make up around 20 percent of group sales, as Kellogg announced in Battle Creek in the US state of Michigan. In the future, the group wants to concentrate on the global business with snacks such as "Pringles" chips and "NutriGrain" bars as well as on the breakfast cereal business outside of the USA, Canada and the Caribbean, which promises higher growth rates.
The split is the next step in the restructuring of the group, which began years ago with numerous brand and product acquisitions, said Kellogg CEO Steve Cahillane. "Each of these companies is designed to create greater value for all stakeholders, and each is poised to shape a new era of innovation and growth."
The European business will be almost entirely part of the future core business, operating under the working title "Global Snacking Co." company and that Cahillane wants to continue. The company will grow faster than Kellogg today. Of the 11.4 billion dollars in sales that this part of the company recently generated, almost 50 percent continue to come from the USA, but ten percent also come from Africa, where Kellogg is successfully selling noodles.
In the "North America Cereal Co." The business with cornflakes, froot loops and rice krispies ends up in North America, where Kellogg has sales of 2.4 billion dollars, but which is hardly growing and has significantly lower profit margins. The first priority here will be to stabilize sales and improve margins.
The "Plant Co.", which has a turnover of around 340 million dollars with vegetarian and vegan frozen products, primarily under the "MorningStar Farms" brand, is to be spun off by the end of 2023, like the North American business. The Kellogg shareholders would then receive additional shares from both companies in their custody account. However, Cahillane does not rule out that the division will be sold beforehand instead.
