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Yahoo Finance Live anchors discuss Kellogg’s decision to split into three independent companies.
Video Transcript
JULIE HYMAN: Let's talk about another restructuring, this one at Kellogg. The company is going to split up into three independent companies. So in one of them, US, Canadian, and Caribbean snack foods. In another, cereal. And the third, its plant-based businesses, which will be the smallest of the three, but that'll be a pure play, which is intriguing, given that the other pure play that we have in the plant-based business, Beyond, hasn't performed so well in the public markets. But that said, the company judging that it can perform better by getting into these three different companies.
BRAD SMITH: Yeah, the remaining business, they say, represented about 80% of net sales in 2021. So that part of the strategic push here. And that's focused on global snacking, international cereal and noodles, and frozen breakfast. And I have been a big advocate for the breakfast wars and exactly where that needs to continue to get more of the consumer's attention.
If you look at where consumers are going to look across their spending and say, all right, where does it make more sense within the different meals of the day for me to have a packaged good or have something that is in the freezer? And where does a Kellogg, as a company, be able to take up more of that refrigerator or freezer space in the form of breakfast, knowing some of the alternatives out there are really in the form of fast food or fast casual in that sense, too. And I think that's exactly where Kellogg can lean into where people might go back into snacking in the pantry and the freezer, particularly, in times of a spending pullback, if you will, or at least, a more cost conscious consumer.
JULIE HYMAN: Yeah, although it seems like people are still spending on snacking. And that's as the company talks about the rationale, that $11.4 billion snacking company, it says, will be a higher growth company compared to the other two. In cereal, they're going to focus on improving profit margins. And in plant-based food, which is anchored by Morningstar Farms, which is sort of a vegetarian brand that's been around for a while, veggie-based meat, that they're going to focus on accelerating growth in that particular brand. So investors liking this news about this split.