Kellogg to split it up and move its snacks to Chicago

The Kellogg Company announced plans to split on Tuesday, saying it would split itself into three separate companies focused on grains, plant-based foods and snacks. The snack company will be headquartered in Chicago, and will have campuses in both the city and Battle Creek, Michigan, the company said in a press release.

The news comes a week after Caterpillar, the maker of mining and construction equipment, announced plans to move the company’s headquarters from Deerfield to Irving, Texas, and less than two months after Boeing announced it was planning to move its headquarters from Chicago to Arlington, Virginia.

The company is headquartered in Chicago at 412 N. Wells St. , where Kellogg’s offices are actually located. The company also has offices in Naperville and currently employs more than 300 people in the Chicago area.

The company said that Kellogg’s snack division, which includes brands like Pringles and Rice Krispies Treats, will account for 80% of Kellogg’s net sales in 2021. The grain and plant-based companies, which together account for 20% of net sales, will be headquartered in Battle Creek. . All three companies will be publicly traded. The names of each company have not yet been announced.

“All of these companies have great potential in their own right, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” Steve Cahillan, Kellogg’s Chairman and CEO, said in a statement.

“In turn, each company is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”

In a tweet Tuesday, Major Laurie Lightfoot said she spoke with Cahillan and was “delighted” that the snack company will be based in its current Chicago offices “at the end of 2023.”

In an interview, Cahillan said that Kellogg’s current Chicago footprint, the city’s infrastructure for international travel and the culture of its food innovations all played a role when deciding where the snack company’s headquarters would be.

As of now, he said, the company will not require employees to relocate.

“After 18 months, when the business is up and running and new people are joining the organization, there is a very real possibility that they will want to be in Chicago,” he said.

Michael Vasnacht, CEO of World Business Chicago, the city’s public and private economic development agency, echoed Cahillan’s comments about the city as a center for food innovation.

“It only confirms Chicago’s position as the global capital of food innovation,” he said. “I think it is the result of all of our focus on food and (agriculture). It is one of our key industry sectors.”

Over the past five years, Wassnacht said, the number of food or agriculture-related businesses headquartered in Chicago has grown from less than 100 to more than 400.

Wassnacht said the new headquarters could have ripple effects in the industry, encouraging more businesses and jobs in Chicago.

One of the main advantages that companies bring to a city or state is jobs, and the location of a corporate headquarters doesn’t always translate into a large number of roles, said Harry Kramer, professor of management and clinical institutions in the Kellogg School of Management at the Kellogg School of Management at the Kellogg School of Management. Northwestern University and former CEO of Baxter International. He noted that Kellogg already has an office in Chicago.

But he agreed with Fassnacht that moving the snack company’s headquarters to the city could have ripple positive effects for other businesses.

“It’s not the direct effect of what they’re doing, it’s the potential signal it brings to other people trying to figure out what to do,” he said.

Along the same lines, he said, leaving Boeing and Caterpillar is not expected to mean thousands of job losses in Illinois, but it may make other companies think twice before moving to Illinois.

Wassnacht said the departures of Caterpillar and Boeing do not represent the trend of companies leaving Chicago and Illinois, but rather exceptions that reflect decisions specific to those companies.

“We had a lot of victories, and we also had some losses,” said Wassnacht. “Boeing and Caterpillar, it was not welcome news. But overall I think this year looks like a very strong year, and the Kellogg news today shows that.”

Wassnacht said no tax incentives were offered to the city to pull the snack company, and he was not aware of any government incentives. Spokespersons for Mayor Lori Lightfoot and the offices of Governor JB Pritzker did not immediately respond to questions about whether there were any incentives.

Kellogg’s shares jumped more than 2% in market trading on Tuesday.

Kellogg said Cahillan will remain chairman and CEO of the snack food company, which had net sales of $11.4 billion last year. The company said the plant and grain management teams will be announced at a later time.

Going forward, the snack company will continue to “innovate” around its major brands, Cahillan said. He said acquisitions would be part of the company’s strategy. Noting the company’s introduction of Cheez-Its to Canada and Brazil, Cahillan said the company will be looking for “more and more opportunities” for international expansion of its big brands in the United States.

The Associated Press contributed.

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