Dealflow | June 22, 2022

Kellogg to spin off plant-based foods from cereal and snack units

Amy Cortese
ImpactAlpha Editor

Amy Cortese

ImpactAlpha, June 22 – The Battle Creek, Mich.-based food giant may be better known for Frosted Flakes, Pop Tarts and Cheez-Its, but since 1999 Kellogg has also sold plant-based sausage, patties and “chik’n” under the MorningStar Farms brand.

The move to split the conglomerate into three companies focused on its faster-growing snacks and slower-growing cereal businesses, but the real secret may be its plant-based meat alternatives. If so, it will be the latest example of a ReNewCo, a corporate spinoff designed to take advantage of investor interest in – and higher multiples for – green and sustainable companies. 

Brand leader

Plant-based products have been a bright spot in the sluggish food market. The growth of alt-meat sales has slowed in recent months, however, and hundreds of alt-protein startups are scrambling to survive. Shares of Beyond Meat are down more than 60% this year amid the broader sell-off.

Kellogg’s MorningStar Farms unit has a plant-based leg up with its established brand, $340 million in sales and, unlike most of its competitors, profits.

The new “PlantCo” has “a significant opportunity to capitalize on strong long-term category prospects,” said Kellogg, which is thought to be open to a sale of the unit.