Kellogg has always been on the lookout for ways to grow and expand. In order to do so, they are taking their business in three separate directions.
Its iconic brands are getting a makeover by the food manufacturing company, with shares climbing as high as 8%.
Kellogg’s decision came on Tuesday, ten years after it purchased Pringles for $2.7 billion, signaling the company to shift its focus towards snacks with more people grabbing food on the go and eating more between meals.
Snack food companies have been a hot commodity as of late, with many big brands such as PepsiCo and Mondelez investing in them.
Kellogg’s previous bestsellers are no longer seen as growth drivers due to people’s changed eating habits. However, the company saw a brief resurgence during the early days of the pandemic.
Kelloggs is expecting cereal revenue growth to remain flat in the future.
In 2018, CEO Steve Callihane said that they were thinking about spinoffs as a potential strategy. Three different businesses have significant potential and now it’s being explored whether or not these could be sold off for money.
The companies are yet to receive a name, and Kellogg’s spinoff companies will have their proposed management teams announced in the first quarter of 2023. CEO Steve Callihane is also set to become chief executive for the global snacking company.
The snacks company, known for brands like Pringles and Pop-Tarts, generated $11.4 billion in revenue last year.
The company has seen an increase in sales from 10%, due largely to the growing noodle business across Africa, as well as their other businesses including Eggo waffles and frozen breakfasts.
It has also been reported by Callihane that Kellogg plans on acquiring other snack-focused companies in an effort to diversify their portfolio.
The North American cereal company managed to generate $2.4 billion in 2021, which will be used as a motivation for them and their spinoff company after they experienced disruptions from the supply chain.
“It’s a pretty stable business, somewhat declining,” said Cahillane.
The CEO is hoping for more innovation and building from the spinoff with less competition in today’s market.