Jun 22, 2022

Kellogg to split into 3 Divisions: snacks, cereals, plant-based food 6/21/22 Transcript

Kellogg to split into 3 Divisions: snacks, cereals, plant-based food 6/21/22 Transcript
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Kellogg Co., the maker of Frosted Flakes, Rice Krispies and Eggo, will split into three companies focused on cereals, snacks and plant-based foods. Read the transcript here.

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Sue: (00:00)
We start with major news involving what is currently West Michigan’s second largest public company. Kellogg is breaking up, splitting into three new companies.

Brian: (00:09)
And the most profitable portion of the company is now moving its headquarters to Chicago. News 8’s David Horak joining us live now from outside Kellogg headquarters in Battle Creek to break down this major announcement. David?

David Horak: (00:25)
Good evening, Sue and Brian. This ends a storied 116-year chapter and starts a whole new one, and the company promising at the same time that no employees here in Battle Creek will be forced to move.

Steve Cahillane: (00:39)
Right now it’s I think the opportune time to do this.

David Horak: (00:45)
A big announcement from the Battle Creek-based company today saying they are divvying up into three, with each directly overseeing a different product category currently under the Kellogg name.

Steve Cahillane: (00:57)
Its management team is wholly focused on the industry and its place in the industry. I think you’ll see greater innovation, you’ll see more brand building, you’ll see bright days ahead of it.

David Horak: (01:06)
CEO Steve Cahillane says he will take on the same role at the newly formed global snacking company whose headquarters will move from Battle Creek to Chicago, but still have campuses in both cities.

David Horak: (01:21)
More than $11 billion of Kellogg’s $14.2 billion net sales last year came from their snacks like Pop-Tarts, Pringles, Cheez-It and Eggo.

Steve Cahillane: (01:31)
They’re principally domestic brands, but as we’ve tinkered with putting them in international markets, they’ve done extremely well. So the international expansion opportunities are absolutely great. The ability to focus on just those brands and just in the snack, mostly the snacking space, is a tremendous opportunity.

David Horak: (01:50)
The other two companies, temporarily named North American Cereal and Plant, will focus on cereal and plant-based foods, respectively. Both will keep their headquarters in Battle Creek and for now, the three companies do not bear the Kellogg’s name, but Cahillane says it might not stay that way.

Steve Cahillane: (02:08)
I wouldn’t at all dismiss the possibility of one of the businesses carrying on the Kellogg tradition in terms of the corporate name. That’s work to be done.

David Horak: (02:20)
The company says the process of splitting into three is expected to go well into next year with the goal of it being finalized by the end of 2023. The city of Battle Creek not taking any interviews or statements at this time, but they said that they will have a press conference tomorrow afternoon, following conversations they will have with the company. But for now, that is what we stand here in terms of this latest development. Back to you.

Brian: (02:46)
Okay, we’ll wait for that tomorrow. David, thank you.

Brian: (02:50)
This move will break up what is currently our state’s fifth largest company. According to Bridge Magazine, Kellogg trails only Stryker, GM, Ford and Dow, with the market cap of $22.8 billion. Investors on Wall Street like the move. Kellogg stock rose as much as $3 today. It closed just under $69, up $1.32 on the day.

Sue: (03:13)
Kellogg’s and Battle Creek have gone hand-in-hand for more than a century. Michele Deselms here now with a look at the cereal giant’s storied history. Michele.

Michele Deselms: (03:21)
Yeah. Millions of people around the globe start their day with a bowl of cereal and it is a phenomenon that all started in Battle Creek.

Michele Deselms: (03:29)
In 1894, while in search of a healthy vegetarian meal to serve at his family’s Battle Creek Sanitarium, W.K. Kellogg invented cornflakes. A decade later, W.K. left the sanitarium to start the Battle Creek Toasted Cornflake Company that would later become the Kellogg Company. They would invent new cereals like Bran Flakes, Rice Krispies, and Corn Pops. Then in 1964, a game changer, Pop-Tarts were born. That’s a move that set Kellogg on a path to be much more than just a cereal company. In the early ’90s, Kellogg’s unveiled Nutri-Grain bars and then a series of acquisitions, first buying Morningstar Farms, and then Kebler Company and Pringles. As cereal sales have slowed through the decades, snacks now account for about 80% of Kellogg sales. Sue.

Sue: (04:15)
All right, Michele, thank you. We expect to get reaction from Battle Creek city leaders after they meet with the company tomorrow. Make sure and stay with News 8 for continuing coverage on this.

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