Kellogg plans to split the company into three separate, publicly traded businesses, and the separation is expected to be completed by the end of 2023.
While Kellogg’s beginnings trace back to the creation of Corn Flakes by W.K. Kellogg in 1894, the surprising decision to split its business shows the company is anything but just a cereal manufacturer.
The Kellogg name is largely synonymous with the category, but the company believes separating the business will allow the individual segments to get more value alone than they would have together as part of a combined entity. It also allows Kellogg to separate out the mature cereal segment from faster-growing, trendier categories in snacks and plant-based protein.
The division also allows each business to focus on what it does best, and make decisions that are best tailored to each operation when it comes to areas like innovation, marketing, and M&A. A plant-based burger from Kellogg’s MorningStar Farms has little in common with its Rice Krispies and Froot Loops cereals, or Pringles, Cheez-It, and Pop-Tarts in snacking.
The company will spin off its North American cereal operation and plant-based division. The remaining business will house its snacks, international cereal, noodles, and North American frozen breakfast brands. The names of the new companies have not been determined. Steve Cahillane, the current CEO of Kellogg, will lead the snacking business, which was responsible for about 80% of the company’s net sales in 2021.
Kellogg is exploring other strategic alternatives for its plant-based business anchored by the MorningStar Farms brand, including a possible sale.
The breakup of the storied Kellogg is the biggest split in the food industry in a decade. In 2012, Kraft Foods divided itself into its North American grocery-food business (now known as Kraft Heinz) and snacking giant Mondelēz International.