Rice Krispie Treats and Rice Krispie Cereals will no longer be made by the same company.
Kellogg said on June 21 that it was splitting into three independent public companies, separating its North American grain and plant-based food businesses. The remaining business, which accounts for 80% of Kellogg’s 2021 net sales, will focus on the global snacks market.
The three separate businesses will be in a better position to focus on their specific priorities, have greater operational flexibility and are all expected to create greater value for shareholders, the company said. The businesses have “significant standalone potential,” Kellogg’s Chief Executive Officer Steve Cahillain said in a statement. The names of the individual companies have not been decided yet.
A growing snacking world
Kellogg’s $2.7 billion purchase of Pringles from P&G in 2012 has paid off: Over the years, Kellogg’s snacks business has boomed as more people stay at home. Between 2020 and 2021, Kellogg’s snacks sales in North America grew nearly 6% year-over-year, according to its 2021 annual earnings report (PDF). Meanwhile, cereal sales declined 14% and frozen food sales declined 3%.
Rivals like Mondelez have also noted a huge demand for the snacks. ,[T]That discretionary part of snacking, I would argue, is that it is no longer so discretionary with modern consumers,” said Mondelez CEO Dirk Van de Put on a conference call with investors and analysts in April. For example, in China, he said there has been a large increase in purchases of snack biscuits as they have become a dietary staple.
Here are the details of the products that the new companies will keep:
- The global snacking company will include brands such as Pringles, Cheese-Its, Pop-Tarts, Kellogg’s Rice Krispie Treats, Nutri-Grain and RxBAR. It will also include cereals from global markets such as Kellogg’s Frosties, Special K, and Cocoa-Pops, which account for less than a quarter of Kellogg’s sales.
- North American cereal company Kellogg’s will focus on Frosted Flakes, Fruit Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi and Bear Naked.
- The plant-based food company, the smallest of the three businesses, will be home to Morningstar Farms, which Kellogg’s bought two decades ago, and other brands that Kellogg’s has not yet recognized.
The North American grain and plant-based companies will be headquartered in Battle Creek, Michigan. Meanwhile, the global snacking company will have its corporate headquarters in Chicago, as well as an office in Battle Creek. The restructuring is expected to be completed by the end of 2023.