Kellogg Co., the maker of Frosted Flakes, Rice Krispies and Eggo, will split into three companies focused on cereals, snacks and plant-based foods.
Kellogg’s, which also owns MorningStar Farms, the plant-based foods maker, said on Tuesday that the spin-off of the yet-to-be-named grain and plant-based foods companies should be complete by the end of next year.
The company, founded in 1906 in Michigan, had net sales of $14.2 billion in 2021, including $11.4 billion generated by its snacks division, which makes Cheez-Its, Pringles and Pop-Tarts, among other brands. Cereals accounted for $2.4 billion in additional sales last year, while plant-based sales totaled around $340 million.
“These companies all have significant stand-alone potential, and increased focus will allow them to better direct their resources to their distinct strategic priorities,” said CEO Steve Cahillane.
Cahillane will become chairman and CEO of the global snacking company. The management team of the grain company will be named later. The board of directors approved the splits.
Shareholders will receive shares in both spin-offs in proportion to their holdings in Kellogg.
Kellogg’s Frosted Flakes cereal is displayed in a Costco warehouse in Homestead, Pa. Thursday, May 14, 2020. Kellogg’s announced Tuesday, June 21, 2022 that it is splitting into three companies: a cereal maker, a snack maker and a factory-based food company
Kellogg shares rose nearly 4% to $70.15 in morning trading on Tuesday and as high as 70.63 at 11a
The Kellogg’s logo is seen above a trading post on the floor of the New York Stock Exchange, Tuesday, Oct. 29, 2019. Kellogg’s, whose brands include Eggo waffles, Rice Krispies cereal and MorningStar Farms vegetarian products , said the proposed spinoffs from the grain and vegetable companies that have yet to be named are expected to be completed by the end of 2023
Cereal sales in the United States have been declining for years as consumers turn to more portable products, such as energy bars. They saw a brief spike during pandemic shutdowns, when more people sat down for breakfast at home. But sales fell again last year.
Kellogg’s grain business was also rocked last fall by a 10-week strike by more than 1,000 workers at factories in Michigan, Nebraska, Pennsylvania and Tennessee. The strike ended after the company promised higher wages, improved benefits and a faster path to permanent employment for its temporary workers.
In March, a few hundred other workers at a factory that makes Cheez-Its won a new contract with 15% wage increases over three years.
Kellogg said he would explore other options for his herbal business, including a possible sale. Sales of plant-based meat in the United States have plateaued in recent months after several years of strong growth.
Kellogg’s said on Tuesday that the spin-off of the grain and plant-based food companies that have yet to be named should be completed by the end of next year.
CEO Steve Cahillane says, “These companies all have significant stand-alone potential, and increased focus will allow them to better direct their resources to their distinct strategic priorities.”
The cereal and plant-based meat companies will remain based in Battle Creek, Michigan, where Kellogg was founded in 1906. The snack company __ which accounts for 80% of Kellogg’s current sales __ will have two campuses in Battle Creek and Chicago , with headquarters in Chicago.
Kellogg’s three international headquarters in Europe, Latin America and AMEA will remain at their current locations.
Kellogg has been focusing on snacks for years. In 2019, the company sold its cookie, pie crust, ice cream cone and fruit businesses to the Ferraro Group.
Major companies have begun to split at an accelerated pace, including General Electric, IBM and Johnson & Johnson, but such splits are rarer for food producers. The industry’s last major split was in 2012, when Kraft spun off to create Mondelez.
Mondelez made its own big play in the snacks business on Monday when it announced it would acquire Clif Bar & Co., a major energy bar company. The $2.9 billion deal is expected to close in the third quarter.
This is a particularly perilous time in the food industry due to rising costs, both for labor and materials. Russia’s invasion of Ukraine pushed grain prices higher and this month the United States reported inflation hitting four-decade highs.
Kellogg shares rose nearly 4% to $70.15 in morning trading on Tuesday.
In 1906, WK Kellogg founded the “Battle Creek Toasted Corn Flake Company”
The company was later renamed the Kellogg Toasted Corn Flake Company in 1909.
Tony the Tiger was introduced with Sugar Frosted Flakes in 1952
- In 1906, WK Kellogg founded the “Battle Creek Toasted Corn Flake Company”
- From 1969 to 1970, the slogan “Kellogg’s puts more into your day” was used
- In 2001, Kellogg’s acquired the Keebler Company for $3.87 billion.
- In 2012, Kellogg’s became the world’s second largest snack company (after PepsiCo) by acquiring Pringles from Procter & Gamble for $2.7 billion.
- In 2017, Kellogg’s acquired Rxbar for $654 million and opened new offices in Chicago.
- In the UK, Kellogg’s launched the WK Kellogg brand of organic, vegan and plant-based cereals (granolas, organic whole wheat and “super grains”) with no added sugars
- In 2018, Kellogg’s ceased operations in Venezuela due to the country’s economic crisis
- In 2019, Kellogg’s Venezuelan cereal boxes featured the Venezuelan flag
- In April 2019, the company announced that it was selling Famous Amos, Murray’s, Keebler, Mother’s and Little Brownie Bakers for $1.4 billion.
- In June 2019, Kellogg’s announced its next-generation Kellogg’s® Better Days global commitment, focusing on hunger, children and farmers.
- In October 2019, Kellogg’s partnered with GLAAD by “launching a new limited-edition ‘All Together Cereal’. It also donated $50,000 to support GLAAD’s anti-bullying and LGBTQ advocacy efforts. .
- In January 2020, Kellogg’s began working with suppliers to phase out glyphosate use by 2025
- In October 2021, workers at all Kellogg’s grain plants in the United States went on strike over a new disagreement over working conditions.
- In December 2021, a tentative agreement was reached to end the workers’ strike, but union members rejected the agreement. Kellogg’s has announced it will seek to replace the 1,400 strikers
- On December 21, 2021, about 1,400 Kellogg workers approved a deal and the strike, which had lasted 77 days, finally ended
- On June 21, 2022, Kellogg’s announced that the business will separate into three companies focused on cereals, snacks and plant-based foods.
Corn Pops was released in 1950