Back to basics: Kellogg’s considers ditching cookies and fruit snacks to focus on core businesses

13 Nov 2018 --- The Kellogg Company is exploring the sale of its cookies and fruit snacks businesses to sharpen its focus on its core businesses, in a bid to make the company more agile, according to the company CEO. Investing in the areas of business with the highest growth opportunities is central to Kellogg's growth strategy and following an in-depth assessment, the company is looking into the sale which would include the Keebler, Famous Amos, Mother's and Murray brands.

“We need to make strategic choices about our business and these brands have had difficulty competing for resources and investments within our portfolio,” says Steve Cahillane, Chairman and Chief Executive Officer, Kellogg Company.

“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,” he adds.

The US multinational food manufacturing giant is also implementing a significant change to its North American business designed to ensure that it has the right operating model and portfolio to deliver profitable growth in the years ahead.

Starting next January, Kellogg's North American (KNA) organizational structure will be redesigned to help the company “win in the marketplace and deliver top-line growth,” a statement from the company reads. 

“Kellogg Company's Deploy for Growth Strategy, announced earlier this year, calls for the company to sharpen our focus and align our resources around our biggest opportunities to grow our top line and return to long-term sustainable growth,” adds Cahillane. “Ultimately, we believe these changes will make Kellogg more agile and better focused on growing demand for our foods.”

Kellogg is making four primary changes to its KNA organizational structure:
1. Consolidating US Morning Foods, Snacks and Frozen Foods business units into a single, categories-focused organization comprising 80 percent of KNA revenue;
2. Combining Morning Foods, Snacks and Frozen and Retail Channels sales teams within a single Kellogg US sales organization to improve customer focus;
3. Building a consolidated, end-to-end KNA Supply Chain including procurement, manufacturing, logistics, and customer service to increase scale, enhance capability and ensure delivery of the company's growth goals;
4. Investing in new eCommerce and Integrated Business Planning capabilities.

“Successfully achieving our Deploy for Growth Strategy in KNA requires that we grow our business through strong commercial ideas and innovation, prioritized investment choices, excellence in execution and increased speed-to-market,” adds Chris Hood, President, Kellogg North America. “We are confident the changes we are putting in place will help us achieve these objectives.”

The reorganization of Kellogg North America is one of the final planned initiatives under the Company's Project K restructuring program. As such, its up-front costs and ongoing savings are included in the previously communicated financial estimates for the five-year program. The company says that the financial impact of the potential sale of businesses will be addressed upon the announcement of any transaction.

This announcement comes at a time of shifting consumer preferences away from packaged goods toward fresher and healthier alternatives.