Kellogg Becomes Latest Food Company to Look at Slimming Down

(Bloomberg) -- Kellogg Co. is looking for buyers of its cookies and fruit snacks businesses as the cereal maker seeks to refocus on the fast-growing parts of its business.

  • The move is part of the company’s strategic plan that was announced earlier this year. “Ultimately, we believe these changes will make Kellogg more agile and better focused on growing demand for our foods,” Chief Executive Officer Steve Cahillane said in a statement.

Key Insights

  • Kellogg is hurting from cereal’s declining popularity. The sale of cookies and fruit snacks units may let the company devote more resources to turning that area around. The company also wants to appeal to a generation of consumers that’s seeking out healthier snack options.
  • The company is also trying to simplify its corporate structure. It will unify its U.S. morning foods, snacks and frozen foods business into a single unit that generates 80 percent of revenue in North America. The idea is to react to market trends faster and consolidate areas like manufacturing and logistics.
  • Kellogg isn’t alone in seeking to lighten its portfolio -- fellow packaged-food giants are trying to shed lethargic brands in a bid to maximize sales and profit. General Mills Inc. has said it wants to divest about 5 percent of its portfolio. Campbell Soup Co. also wants to sell parts of its business.
  • The businesses up for sale could include well-known brands such as Famous Amos, Chips Deluxe and Keebler cookies. They’re part of the larger U.S. snacks unit, which makes up about 21 percent of Kellogg’s revenue.

Market Reaction

  • Kellogg shares were unchanged after the close of regular trading. The stock has declined 5.4 percent this year, compared with a 2 percent gain for the S&P 500 index.

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