Kellogg’s Board of Directors recently announced the approval of a plan to separate its North American cereal and plant-based foods businesses, via tax-free spin-offs, resulting in three independent public companies, each better positioned to unlock their full standalone potential.
One of the three companies, Global Snacking Co., the future owner of the Pringles potato chips brand, is expected to enhance its leadership position in the global snacking, international cereal and noodles, and North America frozen breakfast categories, by focusing investments and capital toward building upon its strong growth momentum and profitability.
Global Snacking Co. had estimated 2021 net sales of USD11.4bn and estimated EBITDA of approximately USD2.0bn on an adjusted basis, based on preliminary allocation assumptions. Nearly 60% of its net sales come from global snacks, participating in growing categories and led by iconic, world-class brands including Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, Nutri-Grain, and RXBAR, among others.
Less than a quarter of its net sales come from cereal in international markets, featuring world-class brands such as Kellogg’s, Frosties/Zucaritas, Special K, Tresor/Krave, Coco-Pops, and Crunchy Nut, among others. By remaining with Global Snacking Co., this international cereal business provides scale, continuity, and growth for the company’s Europe, Latin America, and AMEA Regions. About 10% of its net sales come from noodles in Africa, a rapidly expanding business. The remainder, less than 10% of its net sales, comes from frozen breakfast and the world-class Eggo brand. Geographically, North America will represent just under half of the net sales, emerging markets about 30% of net sales, and developed international markets more than 20% of net sales.
“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value. This has included re-shaping our portfolio, and today’s announcement is the next step in that transformation. These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities. 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,” Steve Cahillane, Kellogg Company’s Chairman, and Chief Executive Officer declared.
According to experts, this business is expected to be a higher-growth company than today’s Kellogg Company, featuring a more growth-oriented portfolio and aided by more focused resources and attention to brand building, innovation, and international expansion of world-class brands, and to building scale in emerging markets. This business is expected to expand profit margins through operating leverage, revenue growth management, productivity, and increasing emerging-markets scale.
