As of Tuesday, US-based food manufacturer Kellogg’s has re-branded itself as “Kellanova”. The news comes after the $31.3 billion giant was split into two separate NYSE-listed companies.
Its North American cereal business was spun off into a new entity –WH Kellogg Co. Meanwhile, Kellanova will focus on becoming a “global snacking powerhouse” with a portfolio of iconic brands such as LCMs, K-Time bars and Pop Tarts.
Shopgrok’s founder and CEO Aaron Cowper recently caught up with the Sydney Morning Herald to discuss the implications of these changes for Kellogg’s shareholders, as well as its relevance within the Australian market.
Aaron told journalists he believed shareholders were likely better served by splitting Kellogg’s portfolio into two businesses:
“The traditional cereal business would likely be slower growth but higher profitability and probably pay high dividends, so it would be more traditional investors, super funds and the like who just want more consistency,” he explained.
“Whereas a growth business is snacking, so higher risk tolerance, high return investors who are wanting to see growth and increase in share price over time.”
Kellanova is the larger of the two entities, with net sales projected at around $US13.5 billion ($21 billion) in 2024 compared with $US2.33 billion projected for WK Kellogg Co.
Kellanova’s growth trajectory (9 percent on an annualized rate between 2019-22) also far outpaces that of its cereal counterpart (1 percent).
ShopGrok’s data corroborates this trend, indicating a pattern of growth within the Australian snack market. We found that the number of products in the snacking category sold in Australia’s major supermarkets has risen by 29 percent in the past 12 months, from 3100 to more than 4000 products.
Meanwhile, the number of snacking brands has also risen from 105 to 140, marking a 41 percent increase.
Click here to read the full Sydney Morning Herald article featuring Aaron.
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