Kellogg to split into three separate companies in major restructuring plan 

US food giant Kellogg has announced radical transformation plans that will see it split into three, independent, public companies. 

Kellogg intends to spin off its cereal operations in North America – covering assets in the US, Canada and the Caribbean – into one entity. 

The MorningStar Farms owner also plans to create a separate plant-based foods business. Kellogg is exploring the possibility of selling the plant-based assets, following the split. 

These two entities collectively represented approximately 20% Kellogg’s net sales in 2021. 

The remaining operations, which represented the other 80% of the group’s net sales last year, are focused on the Pringles maker’s global snacking assets, as well as on its international cereal and noodles operations and its North America frozen breakfast assets. 

Shareholders in Kellogg will receive shares in the two spin-off entities on a pro-rata basis relative to their stakes in the company. The plan has been approved by the company’s board of directors. 

Explaining the rationale behind the move, the Special K owner said: “This transaction represents another bold action toward transforming Kellogg’s portfolio to further enhance performance and value. 

“The proposed separations create greater strategic, operational and financial focus for each company and its stakeholders and will build on Kellogg’s current momentum.” 

Steve Cahillane, Kellogg’s CEO, said: “These businesses all have significant stand-alone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities. 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.” 

For now, Kellogg is naming the three businesses North America Cereal Co., Plant Co. and Global Snacking Co. 

The company’s three international regions – Europe; Latin America; and Asia Pacific, Middle East, and Africa (AMEA) – will remain “almost entirely intact” within Global Snacking Co. 

That business, which generated US$11.4bn in net sales in 2021, pulls in nearly 60% of sales coming from international markets. Cahillane will remain chairman and CEO of Global Snacking Co. 

Less than a quarter of the entity's net sales come from cereal in international markets. “By remaining with Global Snacking Co., this international cereal business provides scale, continuity, and growth for the company's Europe, Latin America, and AMEA regions,” Kellogg said. 

About 10% of this entity’s net sales come from noodles in Africa, which Kellogg describes as “a rapidly expanding business”. 

The Frosties maker said this business is expected to be a higher-growth company than today’s Kellogg group, featuring a more “growth-oriented portfolio and aided by more focused resources and attention to brand building, innovation, and international expansion of world-class brands, and to building scale in emerging markets”. 

North America Cereal Co., with about $2.4bn in net sales, will focus on cereal in the US, Canada, and the Caribbean with the proposed management team for this entity to be announced at a later date. 

“As a stand-alone company, North America Cereal Co. will have greater strategic focus and operational flexibility and will direct capital and resources toward unlocking growth, regaining category share, and restoring and expanding profit margins,” Kellogg said. 

Plant Co., with about $340m in net sales, will be a pure-play plant-based foods company, anchored by the MorningStar Farms brand. 

However, Kellogg said that while it intends to separate Plant Co. as an independent business, it will also explore “other strategic alternatives, including a possible sale”. 

Food majors to miss 2030 carbon-cutting goal, study claims 

The largest food and beverage companies in developed countries are set to fall short of an industry target to cut their carbon footprint for 2030, research claims. 

After analysing pledges made by more than 200 groups based across EMEA and the US, management consultants at AlixPartners estimate carbon emissions will have been cut by 29% from 2019 to 2030. If that materialises, that will fall short of the global industry goal for a 38% reduction under the United Nations’ 2015 Paris Agreement and the Science Based Targets initiative. 

AlixPartners, which came to its conclusion “having analysed the carbon-reduction commitments made so far by the largest western food and beverage companies”, said carbon emissions have so far only been cut by 1% since 2019. 

As the world chases a sustainability strategy to limit global warming to 2 degrees Celsius under the Paris accord, and more ambitiously to 1.5 degrees, AlixPartners said food and beverage companies have a “lack of confidence” in their ability to meet carbon-reduction targets. 

It said 49% of suppliers, 36% of manufacturers and 31% of retailers claim “to be very confident that they will meet their carbon-reduction goals related to their own carbon emissions (as opposed to those created elsewhere in their value chains)”. 

Just Food contacted the likes of Nestlé, Unilever and Danone in Europe for their thoughts on the findings, as well as Tyson Foods, Mondelez International and General Mills in the US. 

Nestlé responded via a spokesperson: “At Nestlé, we remain focused on reducing our absolute emissions by 20% by 2025 and 50% by 2030 versus a 2018 baseline. We’ve already left peak carbon behind and are confident in our ability to deliver further significant reductions in line with our roadmap, which covers Scope 1, 2 and 3, in the years to come.” 

Andy Searle, a partner at AlixPartners, said: “Consumer-products companies need to determine what they need to do and who within their business needs to act within the next 12 months and then within the next 24 months. 

“The ‘doing’ needs to be transferred from the sustainability teams to those in operational roles, and with those in operational roles empowered to take action and goals embedded across the company’s organisational culture. Speeding-up and scaling-up will be vital to driving a successful outcome.” 

AlixPartners’ research was based on findings from 235 food and drinks firms in EMEA and the US assessed by the Netherlands-headquartered World Benchmarking Alliance, a body seeking to forward sustainable development goals. 

The consulting business also analysed commitments made by the “west’s 13 largest food and beverage packaging companies”, as well as a survey of 200 sustainability and operations executives. 

Scope 3 emissions targets, those coming from a manufacturer’s supply chain, unlike internal Scopes 1 and 2, were also found wanting. 

AlixPartners said 27% of executives from suppliers, 13% of manufacturers and just 4% from retailers “are confident that they will meet their carbon-reduction goals relating to emissions made by other companies in their value chains”. 

The consultants added: “This lack of confidence may have been exacerbated by companies’ limited certainty in measuring upstream and downstream carbon emissions across their value chains. The research findings reveal that only 34% of the executives from the suppliers surveyed feel that they are successfully measuring their downstream carbon footprint. 

“Manufacturers show similar uncertainty, with only 25% claiming to be successfully measuring their upstream footprint and only 32% claiming to be successfully measuring their downstream footprint.” 

Mondelez to acquire US energy bar firm Clif Bar in $2.9bn deal 

Mondelez International is adding to its snacks portfolio with the acquisition of US energy bar business Clif Bar & Company for US$2.9bn. 

Cadbury and Oreo owner Mondelez said the deal will see it become a $1bn global snack bar player and continues its expansion in baked snacks. 

Clif Bar, based in Emeryville, California, is a family- and employee-owned business. It owns the Clif, Clif Kid and Luna brand energy bars, which are made with organic ingredients. 

The acquisition of what Mondelez called “on-trend brands” follows the US giant’s recent purchases of snack-bar firms Perfect Snacks and Grenade. 

“This acquisition also advances the company’s strategy to reshape its portfolio to sustain higher long-term growth,” it said. 

Mondelez CEO Dirk Van de Put added: “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. 

Sally Grimes, the former Tyson Foods executive who became Clif Bar CEO in 2020, said: “Mondelez International is the right partner at the right time to support Clif in our next chapter of growth.” 

Mondelez will continue to operate the Clif Bar business from its California headquarters and will also continue to manufacture its products in its facilities in Twin Falls, Idaho, and Indianapolis, Indiana. 

The Clif Bar portfolio is centred on snacks, with a smaller presence in areas including cereal. Before Christmas, the company made a notable move into another category, launching a range of pet food. 

Earlier in 2021, Clif Bar announced it was axing more than 100 posts with an eye on growing sales. CEO Sally Grimes said at the time the company would cut around 125 positions, while adding more roles to the business. 

The move for Clif Bar is Mondelez’s second acquisition of 2022. In April, it announced a deal to buy Mexico-based confectionery company Ricolino from Grupo Bimbo. 

In May, the Lu biscuits owner set out plans to sell its cough sweets brand Halls and some of its chewing gum assets. 

Ben & Jerry’s sues Unilever over sale of ice-cream operations in Israel 

Ice-cream maker Ben & Jerry’s has filed a lawsuit in the US against parent company Unilever over the FMCG giant’s decision to sell its operations in Israel. 

Owned by Unilever since 2000, Ben & Jerry’s filed the case in the US District Court in Manhattan on 5 July alleging the deal with American Quality Products Ltd (AQP) violates the two parties’ original merger and shareholder agreement. 

Unilever revealed on 29 June it had sold its Ben & Jerry’s business interests in Israel to Avi Zinger, the owner of AQP, the current Israel-based licensee, for an undisclosed sum. 

Ben & Jerry’s, founded in 1978 in Vermont by friends Ben Cohen and Jerry Greenfield, announced last July it would no longer distribute its products in Israel-controlled land in the West Bank and East Jerusalem claimed by Palestine. The decision prompted a backlash from Israeli Prime Minister Naftali Bennett. 

Ben & Jerry’s is suing Conopco, a subsidiary of Unilever, according to media reports. The Cookie Dough ice-cream maker is seeking a temporary restraining order and permanent injunction against Unilever. The company wants to prevent Unilever and any third parties from selling its ice cream in the West Bank. 

“This dispute concerns the autonomy of Ben & Jerry’s independent board of directors, and the core values the company has spent the last 44 years establishing,” Ben & Jerry’s said in its filing to the US district court in Manhattan, according to The Financial Times. 

Unilever has said the new business arrangement with AQP follows a review of Ben & Jerry’s in Israel and the deal will “ensure the ice cream stays available to all consumers”. 

It added: “The new arrangement means Ben & Jerry’s will be sold under its Hebrew and Arabic names throughout Israel and the West Bank under the full ownership of its current licensee.” 

Unilever said under the terms of its takeover of Ben & Jerry’s the ice-cream maker and its independent board were granted rights to make decisions about its social mission. However, the FMCG group said it reserved primary responsibility for financial and operational decisions and therefore has the right to enter such an arrangement. 

Just Food approached Ben & Jerry’s for comment but the company did not reply. 

Unilever responded, reiterating its comment on 29 June that it “had the right to enter this arrangement”. A spokesperson said: “The deal has already closed. We do not comment on pending litigation.” 

The company explained in its earlier statement: “Unilever rejects completely and repudiates unequivocally any form of discrimination or intolerance. Anti-Semitism has no place in any society. We have never expressed any support for the Boycott Divestment Sanctions (BDS) movement and have no intention of changing that position.” 

The international BDS movement seeks to pressure Israel to abide by international law in its treatment of the Palestinians. Israel says such boycotts are discriminatory and anti-Semitic. 

Responding to Unilever’s decision to sell Ben & Jerry’s local operation, Israel’s Minister of Foreign Affairs, Yair Lapid, who revealed he had spoken in the last few days with CEO Alan Jope and Avi Zinger, said: “Anti-semitism will not defeat us, not even when it comes to ice cream. We will fight delegitimisation and the BDS campaign in every arena, whether in the public square, in the economic sphere or in the moral realm.” 

US moves to permanently open infant-formula market to overseas players 

The US is taking steps to permanently open up the domestic infant-formula market to overseas players after shortages linked to a factory shutdown caused an outcry among politicians and consumers. 

Abbott Laboratories, one of only three formula producers in the US, along with Nestlé-owned Gerber and Reckitt Benckiser, was forced to temporarily close its Sturgis factory in February following a product recall linked to fears of Cronobacter sakazakii or Salmonella contamination. The shortages were compounded as parents resorted to panic-buying, with Abbott turning to shipments from its factory in Ireland. 

President Joe Biden rushed to enact the Defense Protection Act in May to prioritise local production, along with Operation Fly Formula to bring in emergency supplies from overseas. The US Food and Drug Administration (FDA) put in place a so-called temporary enforcement discretion order to boost imports, subject to regulatory and health checks. 

The fragility of having domestic supply dominate the market was further exposed in mid-June when Abbott had to pause production again, soon after reopening the Sturgis, Michigan, plant due to flooding. 

FDA Commissioner Robert Califf, who faced a US House oversight committee grilling in May over the shortages, is now seeking to open up a permanent “pathway” to overseas suppliers beyond 14 November when the discretion order expires. 

“The need to diversify and strengthen the US infant-formula supply is more important than ever. The recent shutdown of a major infant-formula plant, compounded by unforeseen natural weather events, has shown just how vulnerable the supply chain has become,” Califf said in a joint statement with Susan Mayne, the director of the Center for Food Safety and Applied Nutrition. 

The FDA is “developing [a] new framework for continued, expanded access to infant-formula options”, they explained, a decision welcomed by New South Wales-based Bubs Australia, one of the overseas formula makers cleared to ship into the US, along with local peer Bellamy’s Organic, plus New Zealand’s Fonterra and A2 Milk Co. 

“The FDA has determined that a more streamlined pathway that leverages information we have received for the products for which we are temporarily exercising enforcement discretion would help provide for the long-term availability and marketing of many of them,” the US food-safety agency said yesterday (6 July). 

However, “companies and their manufacturing facilities must meet rigorous FDA standards that ensure the formula is both safe and nutritious”, it added. 

The FDA is also seeking to throw open the market to more domestic players, through a “single technical assistance contact at the FDA for any company aiming to enter the US infant-formula market, making it easier for potential new entrants to navigate the FDA’s regulatory review process”. 

Further guidance will be provided in September to outline how formula makers can gain a permanent foothold in the US market. 

Mixed response to France ban on meaty terms for plant-based protein

France’s move to ban manufacturers from using meaty terms for plant-based protein products has met with a mixed reaction.

A new legislative decree means that from 1 October the use of meaty names such as ‘steak’ and ‘sausage’ will be outlawed on plant-based protein food.

“It will not be possible to use sector-specific terminology traditionally associated with meat and fish to designate products that do not belong to the animal world and which, in essence, are not comparable,” the decree reads.

France becomes the first country in the European Union to impose such a ban. The EU rejected a similar proposal that would have resulted in bloc-wide restrictions in 2020.

The French decision follows hot on the heels of a ban on meaty terms for food containing no meat announced by the South African government.

Like South Africa, France has a powerful farming and meat lobby and it has applauded the announcement of the ban.

Interbev, the National Interprofessional Association for Livestock and Meat, said the move “represents a major step forward in the transparency of information provided to consumers”.

Its president, Jean-François Guihard, said: “The protection of meat designations and their regulatory framework is a very important subject on which our body has been mobilising for several years.”

A joint statement from French farmers’ unions – including the country’s largest FNSEA – also welcomed the ban but suggested it did not go far enough.

“This remains insufficient and will not avoid any confusion with the French consumer, in particular for meats,” it said.

The unions are concerned the ban does not cover imports from other EU countries and has urged the French government to “bring the file to Brussels” in order to “widen the scope applicable to all products, regardless of their origin”.

The union statement added: “Once again France is showing the way, let us be up to it by implementing this new provision at European level.”

On the other side of the argument, ONAV, a French association of scientists and health professionals promoting a plant-based diet, described the decree as “part of a logic of extensive protection of the economic interests of the meat sector”.

It added: “While climate experts, health professionals and consumer associations are now calling for better regulation of the marketing and promotion of the least sustainable foods and the promotion of healthier options, it risks hindering and delaying the development of the plant sector in France as well as the transition to healthier and sustainable diets with a stronger plant component.”

ONAV suggested the terms which are being banned for non-meat products “are already used by a majority of the population and do not bother consumers, the vegetable nature of the products being the desired element and motivating the act of purchase”.

The organisation also argued that because the decree only targets domestic producers, it will lead to “a competitive disadvantage that France risks paying in the future”.

Terms like ‘milk’, ‘butter’ and ‘cheese’ are already banned at the European level on products that are not of animal origin.