The Best Cereal Company Is Now In Major Trouble
Kellogg's could be in major trouble after facing year-over-year declining sales along with a myriad of other issues.
This article is more than 2 years old
The cereal giant Kellogg’s is in trouble. The brand is synonymous with delighting customers every morning with its vast range of cereals but has seen a significant decline in its sales over the last number of years.
For decades it was the global leader in everything breakfast related, but it has incurred a range of problems that have reduced its popularity. One of the problems includes a number of lawsuits regarding the nutritional content of its cereals as more consumers are turning to healthier alternatives.
It is not only lawsuits that the company is facing, as last year, it also had an enormous fire in its Memphis production branch, destroying the building. If that wasn’t enough, later that year, over one thousand employees went on strike due to how much they were being paid and their lack of benefits. The strike went on for over three months, and after negotiations, both Kellogg’s and their employees signed a new contract agreeing to a $1.10 raise per hour for all employees.
Earlier this year, Kellogg’s announced it is going to split into three different companies. This was to diversify their portfolio and focus on specific niches in the market. Their CEO stated that while Kellogg’s has focused on completely reinventing itself, separating into three new companies was the next natural step. Even though it will unlock an entirely new area of the market for them, the split will not happen until 2023.
The global company will expand its food portfolio from breakfast cereal to snacks as post-pandemic consumers are stocking up on longer-life foods. Also, their plant-based alternative foods, including burgers and chicken nuggets, are gaining steadily in popularity. These plant-based snacks will be split into one of the new companies, even though it may be hard for them to sell at a high rate solely on their own.
The cereal section of the company will be the first to separate in 2023. Then the plant-based alternative snacks will then detach at a later date. The new names of the latest companies have yet to be announced. From the announcement, its stock increased for the first time in over a year by 5.5%.
Splitting the cereal business will give it a chance to recuperate its sales following a disastrous year and stop competing with Kellogg’s growing snack sector. The cereal section will be allocated its own resources and team to explore new marketing strategies and products in an effort to push low sales back up and become a global leader once again.
Many companies have had incredible struggles over the last number of years with the COVID-19 pandemic, inflation, war, and the cost of living crisis. It is tough to retain any profits with so much economic uncertainty.
Splitting the company into three different companies gives Kellogg’s a better chance of expanding each section of its business portfolio, but it also covers them that if one area were to fail, it does not take down the entire company. It is a clever move from the global company, and it is easy to see why they have been in business for so long.
