Food Service & Agriculture, Manufacturing, and Retail

Kellogg restructuring North American business

November 13, 2018
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Kellogg Company is based in downtown Battle Creek. Photo via flickr.com

Kellogg Company is making two major changes to its North American business as part of a recently announced growth strategy.

The Battle Creek-based food maker announced two changes yesterday as part of its Deploy for Growth plan that are “designed to ensure it has the right operating model and portfolio to deliver profitable growth in the future.”

First, beginning on Jan. 1, the Kellogg North America, or KNA, organizational structure will be “re-designed.”

The organizational changes are expected to impact about 30 employees in Battle Creek, according to Kris Bahner, SVP of global corporate affairs, Kellogg Company. She said there will be no impact to its operations or employees working in the Grand Rapids area.

Second, Kellogg is “exploring the sale” of its cookies and fruit snacks businesses to allow the company to better focus on 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, chair and CEO, Kellogg Company.

“Ultimately, we believe these changes will make Kellogg more agile and better focused on growing demand for our foods.”

Structural changes

Kellogg said it is making four primary changes to its KNA organizational structure:

  • Consolidating its 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 Foods and Retail Channels sales teams within a single Kellogg U.S. sales organization to improve customer focus
  • Building a consolidated, end-to-end KNA supply chain, including procurement, manufacturing, logistics and customer service to "increase scale, enhance capability and ensure delivery of the company’s growth goals"
  • Investing in new e-commerce and integrated business planning capabilities

Cutting cookies and fruit snacks

Investing in the business areas with the highest growth opportunities is central to shaping a growth portfolio, a key component of Kellogg’s Deploy for Growth strategy, according to Kellogg.

After a thorough assessment, the company is exploring the sale of its cookies business (including the Keebler, Famous Amos, Mother’s and Murray brands), and its fruit snacks business (including the Stretch Island brand).

“These brands have had difficulty competing for resources and investments within our portfolio,” Cahillane said. “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.”

Project K

The re-organization of Kellogg North America is one of the final initiatives under the company’s Project K cost-saving and restructuring program, a four-year plan announced in late 2013 that kicked off in 2014.

Its up-front costs and ongoing savings are included in the previously communicated financial estimates for Project K.

Kellogg

Founded in 1906, Kellogg Company (NYSE: K) offers more than 1,600 foods, including cereal, crackers, savory snacks and frozen foods.

Kellogg had 2017 sales of about $13 billion, down from $14.8 billion in 2013.

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