Kellogg spinning off iconic cereal business, splitting into 3 companies

Iconic breakfast brand Kellogg’s will soon go by a new name. The company on Tuesday announced plans to split into three independent public companies to represent cereal, snacking and plant-based products.

“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” Kellogg Company CEO Steve Cahillane said in a release.

While cereal is probably the most recognizable of the Kellogg family — with household brands like Corn Flakes, Rice Krispies and Frosted Flakes — the North American cereal category made up just 17% of net sales in 2021. Plant-based products, mostly represented by Morningstar Farms, represent about 2.4% of net sales. Snacking is the real behemoth behind Kellogg, making up 80.6% of net sales last year.

Kellogg said the tax-free spinoff will be complete by the end of 2023, noting the company does not yet have new names for the trio of companies, simply calling them North America Cereal Co., Plant Co., and Global Snacking Co. for now. The first two will continue to be headquartered in Battle Creek, Michigan, while the snacking company will keep its corporate headquarters in Chicago, maintaining its dual campuses there and in Battle Creek.

Investors responded favorably to the news, with the stock jumping 5% at Tuesday’s market open.

Kellogg isn’t the only renowned brand to announce a major split in the past year. At 129 years old, General Electric announced in November it would split into three public companies focusing on aviation, health care and energy to simplify business. Also in November, Johnson & Johnson announced plans to split into two companies focusing on pharmaceuticals and consumer products.

Ten years ago, Kraft Foods completed a similar 2-company split, separating its North American grocery business and global snacking business.