For many years, Kellogg’s Cornflakes was a delight of Nigerian homes, even though it was imported, and so it made business sense when word first filtered out around 2015 that the company was setting up to produce locally.
The company had announced what it described as “a new, long-term partnership with leading food company Tolaram Africa, significantly increasing Kellogg’s presence in the growing African market and advancing the company’s breakfast, snacks and emerging market strategies to drive future growth.”
This was to create a joint venture between Kellogg Company and Tolaram Africa to develop snacks and breakfast foods for the West African market. This entailed the acquisition of 50 percent of Multipro, a sales and distribution company in Nigeria and Ghana, as well as its stake in Tolaram Africa Foods (which owns 49 percent of Dufil Prima) in the future. Dufil Prima manufactures food brands, including Indomie noodles, Minimie snacks, Power oil and Power Pasta.
“As a region that is experiencing explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next 10 years, sub-Saharan Africa provides tremendous opportunity for our company,” John Bryant, chairman and CEO of Kellogg Company, said at the time.
Last week, the company announced a plan to separate its North American cereal and plant-based foods businesses, via tax-free spin-offs, resulting in three independent public companies, each better positioned to unlock their full standalone potential.
The three companies, whose names will be determined later, include “Global Snacking Co.”, with about $11.4 billion* in net sales, expected to be a leading company in global snacking, international cereal and noodles, and North America frozen breakfast, with iconic, world-class brands and strong underlying growth momentum and profitability.
“North America Cereal Co.”, with about $2.4 billion in net sales, is expected to be a leading cereal company in the US, Canada, and the Caribbean, with a portfolio of iconic, world-class brands and compelling opportunities for investment and profit growth.
“Plant Co.”, with about $340 million in net sales, is expected to be a leading, profitable, pure-play plant-based foods company, anchored by the MorningStar Farms brand, with a significant opportunity to capitalise on strong long-term category prospects by investing further in North America penetration and future international expansion.
The Global Snacking Co, where the cornflakes and noodles fall, is to focus investments and capital toward building on its strong growth momentum and profitability.
Kellogg 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. Steve Cahillane will remain chairman and CEO of Global Snacking Co, the company said.
Global Snacking Co. had estimated 2021 net sales of $11.4 billion and estimated EBITDA of approximately $2.0 billion on an adjusted basis, based on preliminary allocation assumptions.
Nearly 60 percent of its net sales come from global snacks, participating in growing categories and led by iconic, world-class brands including Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, Nutri-Grain, and RXBAR, among others.
Less than a quarter of its net sales come from cereal in international markets, featuring world-class brands such as Kellogg’s, Frosties/Zucaritas, Special K, Tresor/Krave, Coco-Pops, and Crunchy Nut, among others.
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.
About 10 percent of its net sales come from noodles in Africa, a rapidly expanding business.
The remainder, less than 10 percent of its net sales, comes from frozen breakfast and the world-class Eggo brand.
The business is expected to be a higher-growth company than today’s Kellogg Company, 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.
This business is expected to expand profit margins through operating leverage, revenue growth management, productivity, and increasing emerging-markets scale.
“Tolaram Africa has built a highly successful consumer products business and today, it is one of the largest food companies in Nigeria,” said Bryant in an earlier statement. “Tolaram has a great track record of building beloved consumer brands, including the market leader Indomie noodles, and fuelling their growth. This partnership is an excellent strategic fit for Kellogg.”
While the Kelloggs-Tolaram Nigeria Limited joint venture was said to be established to develop snacks, breakfast foods, and noodles across the West African region, the noodles component is yet to manifest in the Nigerian market.
