Kellogg Company announced two significant changes to its North American business designed to ensure it has the right operating model and portfolio to deliver profitable growth in the future.
First, beginning in January 2019, Kellogg's North American (KNA) organizational structure will be redesigned to better enable the company to win in the marketplace and deliver top-line growth. Second, Kellogg is exploring the sale of its cookies and fruit snacks businesses to enable the company to bring a sharper focus to 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, chairman and chief executive officer, Kellogg Company. "Ultimately, we believe these changes will make Kellogg more agile and better focused on growing demand for our foods."
Structural changes reduce complexity, increase responsiveness
To increase agility, Kellogg is making four primary changes to its KNA organizational structure:
- Consolidating 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 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; and,
- Investing in new eCommerce and Integrated Business Planning capabilities.
"Successfully achieving our Deploy for Growth Strategy in KNA requires that we grow our business through strong commercial ideas and innovation, prioritized investment choices, excellence in execution and increased speed-to-market," said Chris Hood, president, Kellogg North America. "We are confident the changes we are putting in place will help us achieve these objectives."
Shaping a growth portfolio
Investing in the areas of business with the highest growth opportunities is central to Shape a Growth Portfolio, a key component of Kellogg's Deploy for Growth Strategy.
After a thorough assessment, Kellogg is exploring the sale of its cookies business (including Keebler, Famous Amos, Mother's and Murray brands), and fruit snacks business (including Stretch Island brand).
"We need to make strategic choices about our business and these brands have had difficulty competing for resources and investments within our portfolio," added Cahillane. "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."
The reorganization of Kellogg North America is one of the final planned initiatives under the Company's Project K restructuring program. As such, its up-front costs and ongoing savings are included in the previously communicated financial estimates for the five-year Project K program. The financial impact of the potential sale of businesses will be addressed upon the announcement of any transaction.
More details were provided during the "Day@K" analyst and investor event on Tuesday, Nov. 13. A webcast of the event is available at https://investor.kelloggs.com.