Kellogg Co. is selling its Keebler, Famous Amos and fruit snacks businesses, making it the latest Big Food company to look to pare down to focus on its core.
Dawn Kopecki and Lauren Hirsch of CNBC.com had the news:
The maker of Special K cereal said Monday it is focusing on its morning foods, snacks and frozen foods brands, which it will consolidate into one unit. Brands like Eggo waffles and Froot Loops comprise 80 percent of the company’s revenue.
“We need to make strategic choices about our business and these brands have had difficulty competing for resources and investments within our portfolio,” Chairman and CEO Steve Cahillane said in a statement. “Yet, we wholeheartedly believe these iconic and beloved brands can thrive in the portfolio of another organization that can focus on driving growth in these particular categories.”
The reorganization is part of Kellogg’s previously announced cost-saving program Project K. Kellogg launched Project K in 2013 to save up to $475 million annually by 2018. As part of that program, Kellogg last year said it would switch from delivering directly to stores to delivering through warehouses.
Other brands up for sale include Murray and Mother’s cookies and Stretch Island fruit snacks.
Danielle Wiener-Bronner of CNN Business reported that the company also plans a North America reorganization:
At a consumer conference earlier this year, Cahillane singled out the company’s other products — including Cheez-Its, Club Crackers, Rice Krispies Treats and Pringles — as its “power brands.”
The company is also tinkering with the way it sells snacks. When it reported earnings last month, executives said they would increase their investment in single-serve, on-the-go packaging for snacks.
Kellogg also said Monday that it plans to reorganize its North America team and invest in eCommerce to drive growth. Bahner said about 90 roles will be eliminated as part of those changes.
The company said it would share more details during an event for analysts and investors on Tuesday.
Annie Gasparro and Micah Maidenberg of The Wall Street Journal reported that cereal sales have been a problem:
Cereal sales have been a consistent problem for Kellogg in recent years. Kellogg Chief Executive Steve Cahillane, who joined the company about a year ago, has been fighting to stop falling sales of well-known brands like Special K.
“It’s so difficult when you have big consumer brands that are not growing or declining to return them to growth,” Mr. Cahillane said in an interview last month, noting the progress he’s made with cereal sales lately.
Mr. Cahillane’s focus on single-serve snack packages boosted sales in the third quarter but hurt profit, Kellogg said on Oct. 31, sending shares down 9% that day.
Kellogg bought Keebler Foods Co. for $3.86 billion in 2001, tripling its debt load and pitting it against Nabisco, whose brands like Oreo and Chips Ahoy have long dominated the cookie aisle.
