While many people were eating a bowl of Raisin Bran this morning, the brand that makes it shared a major announcement — Kellogg is going to split into three different companies.
Tuesday morning, June 21, 2022, Kellogg’s board of directors passed the plan. After that, Steve Cahillane, the CEO of the giant food corporation, made the division of Kellogg public.
Kellogg’s intention is to split the companies by their major food categories: cereals, snacks, and plant-based foods.
“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,” Cahillane said about the decision in a financial news release.
As the next step, the names of these new, smaller enterprises will be announced by the end of 2023. Meanwhile, Kellogg’s choice involves even more significant change.
Kellogg splitting companies and moving west
As a result of the separation, Kellogg is moving their headquarters from Battle Creek, Michigan, to Chicago, Illinois.
However, the Battle Creek facility is going to remain open to house their new snack food company. The snacks category — not cereal — is 80% of their total revenue per year. Kellogg reports $11.4 billion in this subsection alone for 2021.
Many megabrands like Johnson & Johnson and GE have made similar breakdowns this year. Still, it is exceedingly rare for a food brand to do so — especially one that is 116 years old like Kellogg.
Head of Investment Strategy for SoFi, Liz Young, provided additional insights for CNN Business: “For survival and keeping up with market trends, companies do have to look at what their most profitable lines of business are and where they should spend most of their time and focus. Competition is fierce. Sometimes you have to break it down to build it back up.“
In any case, we won’t have to “leggo our Eggos” anytime soon. They just may be under a different name.
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