APRIL 2, 2019 KELLOGG’S DIVESTS SNACK COOKIE BUSINESS
Kellogg’s has announced plans that they are selling their Keebler, Famous Amos, and fruit snacks businesses to Ferrero, the owner of Nutella, for $1.3 billion in a deal that will close in July 2019.
The deal will include 6 domestic (U.S.) food food manufacturing facilities and the responsibility for a leased manufacturing facility in Baltimore, Maryland.
According to Kellogg’s CEO, Steve Cahillane, "Divesting these great brands wasn't an easy decision, but we are pleased that they are transitioning to an outstanding company with a portfolio in which they will receive the focus and resources to grow."
This will be a dangerous period for employees as the new owner restructures to consolidate operations, eliminate duplicate functions and redundant employees, and cuts additional costs by reducing the workforce.
FEBRUARY 8, 2019 — ADDITIONAL LAYOFFS IN BATTLE CREEK.
Kellogg has announced that the would be cutting 79 positions nationwide, 67 in Battle Creek, in support of their North American division. Also mentioned was the potential sale of their fruit snack and cookie business.
These layoffs are in addition to the 30 positions lost in November, 2018.
Original post …
Kellogg’s has announced that they would be laying off at least 223 workers in its Battle Creek facility as well as mothballing two production lines which may be reinstated if demand grows. Unfortunately, that is only one part of the equation as Kellogg’s restructures its operations. According to published estimates for the large cereal maker, 11,000 people may find their jobs in jeopardy as Kellogg’s becomes ““focused on eliminating work that doesn’t drive the highest returns.” Ohio lost 250 jobs, Tennessee lost 175, North Carolina lost 500, New York lost 300, and 219 lost their jobs in Minnesota. Employees outside the United States are also being affected by the company-wide retrenching.
Jobs are becoming a greater political issue, especially among Democrats like Senator Robert P. Casey Jr. (D-PA) who is requesting that Kellogg provide more specific details about future job losses in Pennsylvania. Even if the company provides a perfunctory response, it is another “talking point” that can be used when campaigning.
According to the New York Times …
“For the last decade, the cereal business has been declining, as consumers reach for granola bars, yogurt and drive-through fare in the morning. And the drop-off has accelerated lately, especially among those finicky millennials who tend to graze on healthy options — even if Cheerios and some other brands come in whole-grain varieties fortified with protein now.”
“Cereal consumption peaked in the mid-1990s, according to the NPD Group, a consumer research firm. Still, some 90 percent of American households report buying ready-to-eat cereal, which remains the largest category of breakfast food with some $10 billion in sales last year, according to Euromonitor, down from $13.9 billion in 2000. And the consumer research firm estimates sales will fall further this year to $9.7 billion.”
You may wish to read the New York Times article in its entirety to get a feel for the buying habits and demographics of a rapidly changing and declining market.
This should come as no surprise to readers as per our blog post, “Getting My Cereal Faster With Outsourcing” which appeared on July 10, 2017.
There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?