Kellogg will be splitting in three companies to take its business higher than ever before. However branching out into the snacking industry.
The food manufacturing company is making a major shift in their iconic brands to focus on snacks. However cereal and plant-based products. The shares of this firm have been seeing an increase as high as 8% in premarket trading.
Kellogg’s decision to shift its focus on the global snack. Business came after an entire decade of purchasing Pringles for $2.7 billion. However signaling that more people are grabbing snacks between meals rather than traditional mealtime foods.
The industry is becoming more competitive with big companies taking over smaller snack brands, including PepsiCo and Mondelez.
Kellogg’s cereals are no longer as popular due to people changing their eating habits. As a result, the company’s bestsellers from before have not been able to drive. However growth in sales like they used too. However, there was an increase for only a brief period of time during the pandemic.
Kelloggs is not optimistic about the future of their cereal business. The company expects flat revenue growth despite the positive revival.
The brand is yet to name their new subsidiary companies. However but it has announced that Steve Callihane will be in charge of the global snack brand. Additionally, the proposed management teams will be announced in the first quarter of 2023.
In 2018, the company began to contemplate spinoffs as a potential strategy. CEO Steve Cahillane said three businesses have significant potential and they are exploring a sale for one of these companies.
The names for the companies are yet to be decided. However and proposed management teams for the spinoff companies will be announced in the first quarter of 2023. Cahillane will also stay as the chief executive for the global snacking company.
The company will have some of the bestselling snack brands such as Pringles, Cheez-It and Pop Tarts under its banners. These snacks reported $11 billion in revenue last year alone.
Similarly, 10% of sales are coming from noodle-based businesses in Africa while another 10 percent comes from Eggo waffles and frozen breakfasts.
According to Cahillane, the company plans to grow its snack portfolio through acquisitions.
The North American cereal company is looking to bounce back from supply-chain disruptions and regain lost market share.
“It’s a pretty stable business, somewhat declining,” said Cahillane.
He is expecting more brand innovation and building from the spinoff with less competition in today’s market.