Kellogg’s is in the process of separating. To better focus on its subsidiary brands and highly diversified portfolio, Kellogg’s will split into three separate entities dedicated to snacks, cereals and plant-based foods. The food giant has determined that dividing its business into three sectors will help promote innovation otherwise slowed by its global focus.
“Kellogg’s has successfully completed its transformation journey to improve performance and increase long-term value for its shareholders,” The Kellogg Company President and CEO Steve Cahillane said in a statement. “This has included redesigning our portfolio, and today’s announcement is the next step in that transformation.”
Kellogg’s will operate the three separate companies as independent public companies. The three segments will allow each brand to better market its products, after the company struggled to best grow its plant-based and cereal-based brands due to its focus on global snack sales. Separate companies will provide more flexibility for each category.
The plant-based company will temporarily be called “Plant Co”. and will work specifically to grow its MorningStar and Incogmeato brands. Kellogg’s first acquired the plant-based brand 20 years ago and due to a recent spike in interest in plants, the company has shifted resources to expand its product selection. The company currently values its herbal brand at $340 million.
“Kellogg’s has grown Morningstar Farms steadily since its acquisition more than 20 years ago, and the brand has the highest share of household penetration in the frozen vegetarian/vegan component category,” Cahillane said. “It is clearly a world-class brand, and it is backed by innovative and proprietary processes and technology in a world-class manufacturing network, and it has tremendous long-term growth potential in a category. benefiting from the growing consumer interest in plants. food-based diets, both for nutritional needs and for environmental reasons.
Kellogg’s aims to strengthen the MorningStar brand for potential sale in the future. The spin-off will allow Plant Co. to maximize its production capabilities and better respond to the massive influx of plant-based consumers in the United States.
Three highly targeted Kellogg’s companies
Cahillane revealed those plans during a June 21 conference call, following the company’s announcement. The food giant will separate these brands so that, for example, plant-based food brands don’t need to compete with snack brands such as Pringles for resources.
Beyond the plant-based business, Kellogg’s other two subsidiaries will focus on global snacks and North American cereals. The global snacks business will include international cereals, noodles, frozen breakfast products and beloved snack brands such as Nutri-Gran and Eggo. The spin-off companies will be operational by 2023.
“This may include investing more in brand building to build consumer awareness and increase household penetration,” Cahillane said. “This may include investing more in emerging food technologies, new supply chain capabilities, expanded distribution across all channels and expanding into international markets. We see this company accelerating sales and earnings growth over time, while an unleveraged balance sheet will give it the financial flexibility to continue investing.
The big food giants are betting big on plants
Major food companies similar to Kellogg’s have recognized the potential of the plant-based sector in recent years. Reports predict that the vegan food market could reach $1.4 trillion by 2050 with the help of food giants like Tyson, Nestle, Cargill and others. To compete with growing plant-based brands like Impossible Foods and Beyond Meat, long-established food brands have introduced vegan brands, acquired smaller plant-based companies, or both.
Dairy giant Danone has made significant progress in the plant sector over the past decade. The company bought popular vegan brand Follow Your Heart last February. The company continues to expand its plant-based selection to offer vegan ice cream, milk, yogurt and now mayonnaise. Last November, Danone converted a French dairy factory into an oat milk plant, investing nearly $50 million to promote its dairy-free sector. From now on, several large companies such as Danone and Kellogg’s will try to adapt to the growing demand for plant-based products.
For more plant-based events, check out The Beet’s News articles.