Kellogg’s reveals plans to split into three separate food businesses

Kellogg’s has revealed its plans to split into three separate businesses as part of its ongoing portfolio transformation.

The bold move comes against the backdrop of rising costs and concerns about consumers trading down to cheaper options as food producers increase prices.

Two arms of the company will be breaking away from Kellogg’s core business, forming a global snack foods company (which will include international cereals), a separate North American cereal business and a smaller plant-based foods business. The two new companies are yet to be named.

Household brands such as Froot Loops and Rice Krispies will form part of Kellogg’s cereal business, while the international snacking company will include products such as Cheez-Its, Pop Tarts and Pringles. Kellogg’s has said it would consider potential acquisitions for the plant-based food business, which will be leading with its MorningStar Farms brand.

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Kellogg’s said the move – which is hopes will be complete by the end of the year – represents “another bold action” toward transforming its portfolio to “further enhance performance and value”.

“The proposed separations create greater strategic, operational, and financial focus for each company and its stakeholders and will build on Kellogg’s current momentum,” it added.

“These businesses all have significant standalone potential and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” said Kellogg’s chair and chief executive Steve Cahillane.

“In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”

Admitting that the markets are not easy at the moment, Cahillane told the Financial Times: “We believe the agility and the focus will help the business operate in a tumultuous time.”

Cahillane also said he believed the strategy would “unlock the full potential of our businesses”.

Shares in Kellogg’s were up by 2.6% as it revealed plans for the tax-free spin-offs.

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