Kellogg considers selling its fruit-snacks, cookies businesses
Packaged-food firm also announces plans to reorganize its North American operations
Kellogg Co. plans to let go of the Keebler Elves.
The food maker on Monday said it is considering a sale of its cookie and fruit-snack businesses, including Keebler, Famous Amos and other brands, to focus on products with fastergrowing sales.
It is the latest food maker to rethink its product range as U.S. consumers buy healthier snacks and fresher foods. J.M. Smucker Co. earlier this year sold Pillsbury baking mixes to a privateequity firm for
$375 million (U.S.), including debt. Nestlé SA in January sold its U.S. candy business, including the Butterfinger and Baby Ruth brands, to Ferrero International SA for $2.8 billion.
Conagra Brands Inc. and General Mills Inc. have said they plan to divest brands that aren’t core to their businesses.
And Campbell Soup Co. is also looking for a buyer for its international cookie brands and for a fresh-juice and carrot business that didn’t fit seamlessly into its portfolio of canned and packaged
products.
Activist investors such as Third Point LLC, which has a stake in Nestlé and Campbell, have encouraged those overhauls. But longstanding food makers still face a challenge in trying to generate robust growth in boxed and canned products that in many cases are out of step with current consumer tastes.
Some companies, including General Mills Inc. and Unilever
PLC, saw sales of their biggest brands improve recently after selling off other brands to refine their focus.
Kellogg said it hadn’t prioritized investing in promotion and innovation for the cookie and fruit snacks brands in recent years.
Selling them would allow the company to “bring a sharper focus to its core business,” Kellogg said in a statement.
The businesses up for sale have about $900 million in annual sales. In addition to cereals like Frosted Flakes, Battle Creek, Mich.-based Kellogg also owns Pringles, Pop-Tarts, Cheez-Its and other brands.
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 singleserve 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.
Nabisco, now owned by Mondelez International Inc., dedicates a lot of money and resources to getting retailers to display its products prominently and to developing new flavors and varieties.
Kellogg also said Monday that it will reorganize its North American unit to be more agile and better allocate resources. The company said it would invest in e-commerce capabilities, consolidate its supply chain and combine several sales teams.