Börse Express – Kellogg’s: Make three out of one

The origin and history of the Kellogg company

Kellogg’s history begins over 100 years ago. In search of an alternative to hard and bland bread at a sanatorium work, the two Kellogg brothers are developing new types of wheat flakes, which henceforth are called corn flakes. Finally, in 1906, one of the brothers founded what is now known as Kellogg’s. At that time, the demand significantly exceeded the supply and required additional production capacity. Soon after, more products and the first steps abroad appear.

Meanwhile, Kellogg’s has become a major food producer. The group is constantly expanding its product portfolio and operates mainly in the breakfast and snack industry. In the last fiscal year (2021), Kellogg’s recorded sales of $ 14.81 billion and a net profit of nearly $ 1.5 billion.

In addition to developing new proprietary products, Kellogg’s continued to expand its product portfolio through acquisitions. For example, in 2012, the potato chip manufacturer “Pringles” was acquired for nearly $ 2.7 billion. The acquisition almost tripled sales in the international snack food business, strengthening the company’s position in the international snack food business. In 2017, RXBAR, a nutritional bar manufacturer, was acquired for $ 600 million.

A few days ago (June 21, 2022), Kellogg’s unexpectedly announced that it would initiate a portfolio transformation by carving out two business areas. After the capital measurement, three independent companies will be listed on the stock exchange.

Three new companies

The new names of the spin-offs have yet to be determined, but they will be presented in a press release with transition names. Business unit “Global Snacking Co.” is expected to focus on the international snack, cereal and pasta markets, which also includes the frozen breakfast segment in North America. According to the company, this business unit reported sales of $ 11.4 billion last year and profit before interest, taxes, depreciation and amortization (EBITDA) was $ 2 billion. Kellogg’s CEO Steve Cahillane will take over as CEO of this entity.

The second of the three divisions of “North America Cereal Co.” focuses on the North American market and offers grains in the US, Canada and the Caribbean. This division contributed $ 2.4 billion in group sales and $ 250 million in EBITDA last year. The main goal is to restore margins and market shares that were affected by supply bottlenecks in 2021. In the long term, it is promised to increase margins and a better return on invested capital.

The third business unit “Plant Co.” it is much smaller. This applies to plant-based foods and focuses on North American end markets. Last year, the Plant Co. contributed 340 million to group sales and 50 million to EBITDA. First, business in North America is expected to be further developed before international expansion occurs in the near future.

After a successful capital measurement, Global Snacking will be the largest of the three start-ups with a sales share of almost 77 percent. North America Cereal accounts for 16 percent and Plant Co. nearly 2 percent of sales.

CEO Steve Cahillane justifies the adjustment to business development over the past few years. Kellogg’s has opened up new geographic markets and has focused on growing businesses, especially in the snack industry. The market position in emerging markets was strengthened through acquisitions and partnerships, and the snack business was strengthened through acquisitions and divestitures. Based on the successful implementation of these initiatives, the Group believes it is appropriate to continue individual business units as independent companies to pursue their own strategic priorities.

Kellogg shareholders will receive shares in the newly formed North America Cereal Co. and Plant Co. As is currently the case (June 2022), both spin-offs should end by the end of 2023.

competition joins

This is not the first such division in the food sector. Also in the United States, Kraft Foods split into two public companies in 2011: Mondelez International and Kraft Foods. Mondelez is positioned in the snack food industry and had nearly $ 29 billion in sales in 2021. On the other hand, Kraft Foods is a food company and was merged with “Heinz” in 2015 to form the “Kraft Heinz Company”.

Competition seems to be getting more and more intense, especially in the candy bar market. Mondelez announced last week (week 25, 2022) that it would acquire energy bar maker Clif Bar & Co. for at least $ 2.9 billion. The private company “Mars Incorporated” has also added to its portfolio another manufacturer of bars called “KIND”. Kellogg’s is also active in this segment with RXBAR and will have to catch up with other large corporations.


Kellogg’s intends to split into three new companies. The international snack food business is the largest by sales and has seen strong growth in the past. The split should enable the North American grain business and plant division to make better use of their resources and better meet their priorities.

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