Kellogg moved a step closer to splitting the 117-year-old company by announcing the names of the two businesses that will result from the much-anticipated separation. The split is scheduled for later this year.
In an interview with Food Dive, CEO Steve Cahillane said the names reflect both the history of the company and the future for the businesses that will be left to stand on their own amid a competitive food environment and changing consumer habits.
The snacking and plant-based company spinoff will be called Kellanova, adopting the Latin word “nova”, meaning new. Its North American cereal business will be known as WK Kellogg Co., named after the company’s original founder.
“We wanted to create something that was disruptive in a way, that when people looked at it, they could see Kellogg because of the iconic ‘K’ in the beginning, but then ask the question, ‘What is that, what’s new?’” Cahillane said of Kellanova. “It’s the next generation of the company.”
The logos for the two companies also hold specific meaning. Kellanova, which will house brands such as Cheez-It and Pringles, features the signature Kellogg ‘K’, followed by a more modern typeface, while the WK Kellogg Co. logo resembles the corn flake maker’s traditional branding.
Previous spinoffs of big food companies — such as Kraft’s split with snacking business Mondelēz International in 2012 — resulted in an entirely new company name.
Kellogg considered a rebrand in this vein, Cahillane said, but ultimately decided to go with a name that held meaning, and wouldn’t be hard to explain to consumers already familiar with the company’s signature ‘K’.
“We’re starting from a stronger position because what we get to explain immediately is what brands are represented by this very interesting new name versus having to start from scratch,” Cahillane said.
Despite the change, products from both companies will still be emblazoned with the recognizable Kellogg’s name. Cahillane said this was something the company never considered altering because of consumers’ familiarity with the iconic brand.
“Kellogg’s will exist as a brand name forever, just like Pringles and Cheez-It,” he said.
Kellogg intends to complete the separation of the company by the end of 2023. The Michigan-based food manufacturer known for Corn Flakes and Froot Loops has increasingly seen value in its snacking business. It makes up roughly 80% of its total sales.
In announcing the split last summer, Kellogg said the separation would drive growth for both companies. This will likely include the acquisition of new brands, the CEO said.
“When the split occurs, both companies will have strong balance sheets,” Cahillane said. “Part of the strategy will definitely be organic growth, continuing at pace, but also looking for opportunities from an M&A standpoint.”
But some things have already changed from the company’s original plan.
Kellogg initially said it would hive off its plant-based brands such as Morningstar Farms into their own company, a decision that was walked back last month amid a slowdown in sales in the meat alternative category. This decision, Cahillane said, was one the company’s investors understood.
“There was an appreciation that it was a pretty simple decision, and still a great opportunity for such a strong brand as this shakeout occurs,” Cahillane said.
Some analysts have raised questions about how much the split will actually drive growth for the two businesses.
When asked after the company’s presentation at a Wall Street conference last month whether Kellogg anticipates its expenses to be normal after the spin off, the company’s CFO Amit Banati said more details about the financial strategy will come later in the year.
Kellogg anticipates two distinct corporate cultures to emerge. Kellanova’s creative decisions will be driven by the fact that it is an international snacks business, the CEO said. Leadership ranks for the snacking company will come at a later date. C-suite roles for WK Kellogg Co. were announced last August.
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