It’s a time of previously unheard Brand turmoil. Little surprise that we said, “Yah. Okay. What else ya got?” when we heard that global confectioner Ferrero has bought out Kellogg’s North American Cereal Business…
Classic Cereal Brands: No longer ‘North American’
You’ll recall that venerable old Kellogg’s recently took a leap into the unknown, calving off its North American cereal business from the mammoth ‘rest’ of the wide-ranging conglomerate.
WK Kellogg, encompassing the ‘domestic’ cereal business, assumed responsibility for brands such as Frosted Flakes, Froot Loops, Special K, and more.
Meanwhile, “Kellanova, a global snacking powerhouse with a leading presence in international cereal and noodles and North America frozen foods, consisting of […] 82 percent of the company’s portfo-lio,” maintains control over of the rest.
Diversify or die?
The split made sense, given the tendency in the 2020s to reorganize large, complex companies into more-efficient, focused working divisions – or whole new, separate companies. Thus, Kellogg says, does the Ferrero acquisition allow both companies to, “focus on their distinct strategic priorities, with financial targets that best fit their own markets and opportunities.”
In plain English, what it means is, the older, foundational cereal business has actually become a drag on the newer, quickly diversifying ‘everything else’ part of the company.
Big deal…
In every sense. The deal actually pays Kellanova (US)$3.1 billion for the cereal business while allowing it to take flight, and continue innovating and diversifying in complementary markets, products and new business areas yet to be identified. And it also gives ‘Nova (US)$3.1 billion to finance that future.
On the other hand, the WK Kellogg acquisition gives Ferrero a turn-key, cash-cow, foot-in-the-North-American Market ‘door’. An ideal opportunity to expand into North America on a foundation of well – established businesses and brands with good earnings and reliable sales/profit performance.
My take
Concepts such as ‘flexibility’, ‘agility’, and ‘versatility’ come to mind in relation to the ‘new’ Kellanova operation.
But the length of time it’s taken me to wrap my head around this story just shows how hard it will be for some of us to get used to the new reality – that brands we grew up with such as, “Frosted Flakes, Froot Loops, Special K, and more,” are no longer ‘North American’…
~ Maggie J.