What The Future Of Kellogg's Will Look Like After Its Historic Split
Corn Flakes, anyone? It's no secret that Kellogg's is a supermarket superhero and a household name. The company is responsible for staple brands like Austin sandwich crackers, Special K, Pringles, Cheez-Its, Eggo waffles, Club crackers, MorningStar Farms plant-based meat alternatives, Pop-Tarts, and many others. Earlier this year, Kellog's announced plans to separate into three distinct companies, via a press release. Per the "portfolio transformation," "Global Snacking Co." would manage snack foods, "North America Cereal Co." would hold down the cereal department, and "Plant Co." would handle plant-based products. Kellogg's planned to execute the division by the end of 2023.
At the time it initially announced the split, the company said its hope was that each new sector of brands would be "better positioned to unlock their full standalone potential," per the press release. In 2021, says data analytics platform Macrotrends, the Kellogg Company's total revenue was $14.181 billion, demonstrating 2.98% year-over-year growth from 2020.
Now, as the deadline draws nearer, the food giant has a clearer picture of what its tripartite future might look like. Per Food Business News, Steven A. Cahillane (president, chairman, and CEO of The Kellogg Company) says it's "inescapable" that the brand will become a totally different company after this three-way division.
Snack sector will dominate, and plant-based proteins might dwindle
When the company comes to mind, many consumers might think of such iconic breakfast-table staples as Frosted Flakes, Apple Jacks, or Froot Loops. But U.S. cereal sales currently only account for 17% of Kellogg's business, reports Food Business News. Looking forward, Cahillane predicts the snacking sector to be Kellogg's most powerful offshoot. "You have Pringles, Cheez-It, Rice Krispies Treats, Pop-Tarts, Eggo, these are world-class brands that are growing exceptionally well," Cahillane said on September 7 at the Barclays Consumer Staples Conference, via Food Business News. "You look at the geographic footprint, we have — already we have 25% in emerging markets. That's going to grow. And so it's 60% that's going to be in snacking." After acquiring the Pringles brand from Procter & Gamble, Kellogg's reportedly saw a $1 billion increase in sales from the chip alone.
After the split, Cahillane says Plant Co. might be sold off to another company and leave the Kellogg portfolio altogether. Indeed, the sale could be coming at an ideal time, economically. A study by nutrition company Kerry from earlier this year found that, recently, plant-based alternatives have been falling flat with some consumers, as they aren't satisfied with the flavor or mouthfeel (via Refrigerated & Frozen Foods). The plant-based alternative MorningStar Farms, says Cahillane, could be a better fit for the "right parent or a different parent or a more appropriate parent, where it could do the same things under a corporate umbrella."