BATTLE CREEK, Mich. (WOOD) — An expert says Kellogg Co.’s plan to restructure into three companies is a smart move.
The West Michigan cereal giant announced Tuesday it will split into three companies focusing on snacks, cereal or plant-based products already made by Kellogg’s. Two of the new companies will remain headquartered in Battle Creek but one will shift to Chicago.
“(I was) shocked that it was announced like this, but I think it’s also a really good move for Kellogg’s,” Dr. Russell Zwanka, director of the food marketing program at Western Michigan University’s Haworth College of Business, said. “We tend to teach our students, ‘go from the customer first.’ And this is really a customer-oriented move.”
Zwanka explained that the decision reflects a paradigm shift in how companies understand changes in consumer behavior. For example, the temporarily-named Global Snacking Company accounted for more than 80% of the Kellogg’s net sales last year.
“That is really the way the world is moving … towards on-the-go, quick, nutritional protein supplements, those kinds of things,” Zwanka explained. “Whereas cereal has been trending down for years.”
In an interview with CNBC Tuesday morning, Kellogg’s CEO Steve Cahillane also acknowledged the change in behavior toward cereal and how it warrants a systemic change to operations.
“(Cereal) had its ups and downs for sure. It’s a pretty stable business, somewhat declining,” Cahillane said. “I think when you have a Kellogg company that is 100% focused on cereal and just its cereal brands, it doesn’t have to compete with Pringles or Cheez-It for resources, its management team is wholly focused on the industry and its place in the industry … I think you’ll see greater innovation, you’ll see more brand building, you’ll see bright days ahead of it.”
Zwanka draws parallels to when Kraft Foods split to form Kraft Foods Group and Mondelez a decade ago — the last major shakeup in the American food industry.
“The customer votes for the product. They don’t necessarily care who is making the product, they just like Oreos. So in essence, it’s the behind-the-scenes we’re talking about today,” Zwanka said. “Nothing would really change, other than the fact that you can probably focus better on the customer once you split them up.”
Kellogg’s says despite splitting headquarters between Chicago and battle creek, no employees will be forced to move.
News 8 reached out to local unions for comment but had not heard back as of late Tuesday afternoon. Battle Creek city leaders declined requests for interviews or statements but will host a press conference Wednesday afternoon following conversations with Kellogg’s.