In Essays

News that the Kellogg Company (it operates as “Kellogg’s”) will separate into three companies is bad news. It’s also kinda sad.

The press release used typical PR bombast to herald “bold steps in portfolio transformation” to describe its plan to create independent companies out of its snacking, cereal, and plant-based brands, which’ll result in lots of unlocking, enhanced performance, momentum, value, and related blah blah.

It’s not a unique idea: Lots of companies have separated their high-growth divisions from slower ones, and there’s evidence that it results in better stock price performance for the former. A simpler business model makes for easier analyzing and selling to investors, and complicated corporate transactions make big money for management consultants, big law, PR agencies, and investment firms.

Other than that, it’s an admission of defeat.

There are certainly problems that need to be addressed. A visit to Kellogg’s website reveals the company’s sad condition with a declaration that it’s “…one of the original plant-based well-being companies.” That’s a reference to its founding by the Kellogg brothers, two guys with nutty ideas about nutrition and health (featured in a bad movie in 1994) who invented the flaking process that makes breakfast cereal and changed our eating habits before Ed Bernays and his work for the pork council changed them again.

Yet a reference is all it is; a click later promotes its leadership in junk food, like Pringles, Cheez-It, and Fruit Loops. Junk Co.’s brands account for 80% of its net sales and, one would imagine, a lion’s share of its profits. The future of junk consumption is somewhat cloudy, though, as consumers are valuing health as much as they do convenience and sugar rushes.

Wellbeing? That’ll be left to ““Plant Co.,” which has a small fraction of Junk Co.’s sales and profits, and its brands are kinda dull. “North American Cereal Co.” is larger on both counts, and it’ll get to keep some of the sugary brands that aren’t considered snacks (a distinction without a difference?), but it’s contending with an uncertain supply chain and faces a future in which people might not eat bowls of cereal for breakfast anymore.

So, all three companies possess strengths and face challenges. Junk needs to get healthier, and Cereal and Plant need to get more popular (i.e. junkier).

How does separating them address these problems? The company’s announcement promises it’ll somehow enable them to focus on their “distinct strategic priorities,” then allocate capital and resources and execute in ways consistent with them.

In other words, Junk Co. will plough more of its profits into selling more junk instead of supporting Cereal or Plant’s brands which, in turn, will have to figure out how to do more with less.

How does it help realize the company’s purported vision for “a good and just world where people are not just fed but fulfilled,” and “creating better days and a place at the table for everyone through our trusted food brands?” What about its gloriously branded ESG campaign called Better Days which claims to be “addressing the interconnected issues of wellbeing, climate and food security, creating Better Days for 3 billion people by the end of 2030?”

It doesn’t. More snacks are bad news for the world.

A glossy corporate purpose campaign and references to a past that have no relevance to the present suggest a company adrift, unable to corral the thinking and people…dare I say communicate and operationalize an actual vision…to create a truly integrated, differentiated, profitable, and sustainable business.

Outsourcing its future to consultants, lawyers, and flacks is the easy alternative, and financial legerdemain the cover story for its defeat.

Start typing and press Enter to search