Kellogg’s new corporate structure is shaped by the growing dominance of snacks

Kellogg’s snacks business is bigger than its cereal business.
Kellogg’s snacks business is bigger than its cereal business.
Image: Reuters/Mike Segar
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Rice Krispies Treats and Rice Krispies cereal will no longer be made by the same company.

Kellogg’s said on June 21 it is splitting into three independent public companies, separating out its North American cereal 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 individual businesses will be better positioned to focus on their distinct priorities, have more operational flexibility, and are expected to create more value for all shareholders, said the company. The businesses “have significant standalone potential,” said Steve Cahillane, Kellogg’s chief executive officer, in a statement. The names of the individual companies have yet to be determined.

A growing snacking world

Kellogg’s $2.7 billion purchase of Pringles in 2012 from P&G has paid off: Over the past few years, Kellogg’s snacks business has boomed as people stayed home more. Between 2020 and 2021, Kellogg’s sales of snacks grew nearly 6% year-over-year in North America, according to its 2021 annual earnings report (pdf). Meanwhile, sales of cereal declined 14%, and frozen food sales declined by 3%.

Rivals like Mondelez have also noted a big demand for snacks. “[T]he discretionary part of snacking is, I would argue, that it’s not so discretionary anymore with the modern consumers,” said Dirk Van de Put, Mondelez CEO on a conference call with investors and analysts in April. In China, for instance, he said there was a big increase in the purchase of snack biscuits because they have become a dietary staple. 

Here’s a breakdown of the products the new companies will house:

  • The global snacking company will include brands like Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, Nutri-Grain, and RXBAR, among others. It will also include cereal from global markets, such as Kellogg’s Frosties, Special K, and Coco-Pops, which make up a much less than a quarter of Kellogg’s sales.
  • The North American cereal company will focus on Kellogg’s Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi, and Bear Naked.
  • The plant-based foods company, the smallest of the three businesses, will be home to MorningStar Farms which Kellogg’s bought two decades ago, and other brands that Kellog’s has not yet identified.

The North American cereal and plant-based companies will remain 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.