Yesterday’s news of EY’s potential split-up created a multi-million frenzy.
Today, it’s American multinational food manufacturing company Kellogg’s, announcing that it will separate into 3 independent public companies. The tax-free sectioning off will be into distinct snacking, cereal, and plant-based businesses by the end of 2023.
The move lifted its share price by 8% in premarket trading but closed up only 1.9%.
The 116-year-old maker of Frosted Flakes, Rice Krispies, Pringles, and Chocos (slurp! :P) also owns MorningStar Farms, the plant-based food maker.
Eyes On The Snack
It’s been a decade since Kellogg’s $2.7 billion purchase of Pringles, which shifted the company’s focus on the snacks business as more and more people were found snacking between meals.
In contrast, cereal consumption seems to be languishing. Cereal brands, including Special and Froot Loops are no longer a part of shopping carts as often as they were – back in the days.
Though the pandemic briefly revived the cereal category as more consumers ate breakfast at home, however, Kellogg has meek expectations when it comes to its cereal business driving revenue in the future.
Instead, the focus will lie on its higher-growth snacks business with exposure to emerging markets. This unit, which will house brands like Pringles, Cheez-It, Pop-Tarts, and RXBAR, accounted for Kellogg’s $11.4 billion revenue in 2021.
The snack-focused company also plans to grow its portfolio through acquisitions.
Big Break-Up Parties
Seems like ‘tis the season of breakups.
Biggies like General Electric, IBM, and Johnson & Johnson have begun plans to split up their business. These moves are uncommon in the food manufacturing space – the last one being in 2012 when Kraft split to create Mondelez.
Too long? Here’s a one-liner: Kellog’s will split into three companies focused on cereals, snacks, and plant-based food by the end of 2023; focus to remain on higher-growth snack business.