Kellogg's Exploring Sale, Streamlining Operations

The company recently announced two significant changes to its North American business - both designed to ensure the right operating model and portfolio.

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Kellogg Company recently announced what they are describing as two significant changes to its North American business. Both are designed to ensure it has the right operating model and portfolio to deliver profitable growth in the future.

According to a release from the company, starting in January 2019, Kellogg's North American (KNA) organizational structure will be "redesigned to better enable the company to win in the marketplace and deliver top-line growth." Second, Kellogg is exploring the sale of its cookies and fruit snacks businesses to enable the company to "bring a sharper focus to its core businesses."

"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," said Steve Cahillane, Chairman and Chief Executive Officer, Kellogg Company. "Ultimately, we believe these changes will make Kellogg more agile and better focused on growing demand for our foods."

With a focus on agility, Kellogg announced four primary changes to its KNA organizational structure:

  • Consolidating U.S. Morning Foods, Snacks and Frozen Foods business units into a single, categories-focused organization comprising 80 percent of KNA revenue.
  • Combining Morning Foods, Snacks and Frozen and Retail Channels sales teams within a single Kellogg U.S. sales organization.
  • Building a consolidated, end-to-end KNA Supply Chain including procurement, manufacturing, logistics and customer service.
  • 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," said Chris Hood, President, Kellogg North America. "We are confident the changes we are putting in place will help us achieve these objectives."

After a thorough assessment, Kellogg is exploring the sale of its cookies business, including Keebler, Famous Amos, Mother's and Murray brands, and the fruit snacks business, including the Stretch Island brand. "We need to make strategic choices about our business, and these brands have had difficulty competing for resources and investments within our portfolio," added Cahillane.

"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." The reorganization of Kellogg North America is one of the final planned initiatives under the Company's Project K restructuring program.

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