Kellogg Split Sees CPG Brands Turn Their Focus to High-Growth Snacking Category

Consumers’ habits have evolved dramatically in the past few years, and brands that do not adapt to their changed preferences risk falling behind. From prioritizing different food categories to exploring new commerce models, the consumer-packaged goods (CPG) space is evolving.

Kellogg, for one, noting the strength of its snacks business relative to its other categories, is splitting its portfolio into three independent public companies. The company announced Tuesday (June 21) its separation into Global Snacking Co., which includes snacks, noodles and more; North America Cereal Co., selling cereals in the United States, Canada and the Caribbean; and Plant Co., selling plant-based foods.

“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value,” said Kellogg Company Chairman and CEO Steve Cahillane in a statement. “This has included re-shaping our portfolio, and today’s announcement is the next step in that transformation.”

The company stated in the release that the goal is for each company to be better able to focus on its priorities and to operate with greater flexibility. The names for each are temporary.

“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” said Callihane. “In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”

Similarly, Mondelēz International announced Monday (June 20) the acquisition of energy bar maker Clif Bar & Company for $2.9 billion, also in a move to focus on driving growth in the snacking category.

“This transaction further advances our ambition to lead the future of snacking by winning in chocolate, biscuits and baked snacks as we continue to scale our high-growth snack bar business,” Mondelēz International chairman and CEO Dirk Van de Put said in a statement. “As a leader and innovator in well-being and sustainable snacking in the U.S., Clif Bar & Company embodies our purpose to ‘empower people to snack right,’ and we look forward to advancing this important work with Clif’s committed colleagues in the years ahead.”

In addition to selling in convenience and grocery stores, Clif also runs a direct-to-consumer (D2C) eCommerce shop, an attractive offering for Mondelēz, which turned its focus to the model in 2020.

“D2C actually unlocks power of consumer data in two senses because you not only get the certain [personal identifiable information (PII)] data but also a lot in terms of behavioral data,” Abhishek Ahluwalia, global eCommerce growth platforms leader for Mondelēz International, told PYMNTS’ Karen Webster in a November 2020 interview.

Read more: Mars, Mondelez Say CPG Direct-to-Consumer Sales Need Constant Innovation

D2C submissions also offer the possibility for brands to explore different loyalty-building models down the line to drive more frequent sales, such as subscription offerings and rewards programs. Kellogg too noted the advantages of D2C channels in 2020, although many CPG companies have been turning their focus away from this model in 2021 and 2022.

See more: Special K, Other CPG Brands Step up D2C Efforts

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