The Kellogg Co. announced quarterly profit and sales figures that beat estimates, and also revealed that it would retain plant-based protein brand Morningstar Farms rather than spin it off as announced in 2022.
Kellogg stated it had explored strategic options to move Morningstar Farms, chairman and CEO Steve Cahillane said in the company’s Q4 2022 Earnings Call, but the company believes it best to keep the brand in-house.
“The environment has clearly changed, and when we look at what’s on the horizon for this category, we see an imminent shakeout coming; it’s happening already,” he said. “Morningstar Farms still has some of the highest household penetration, highest name recognition, fantastic foods, strong in the freezer space where this consumer is migrating, … and profitable unlike many of the peers.”
Given the tough market conditions, the company would likely not see particularly high-quality offers as the alternative-meat segment has been besieged with sluggish market conditions and weak demand for the product. This decision reverses a portion of the June 2022 grand plans that Kellogg would break into three distinct companies, with Morningstar Farms anchoring a new “Plant Co.” separate from the cereal and snacking businesses. Now, the belief is that the plant-based business will fold into the snacking division.
Net sales reportedly rose 12% to $3.83 billion in the fourth quarter, beating analysts’ estimates of approximately $3.66 billion, and the company earned 94 cents per share — another win over estimates. Organic sales was forecast to grow 5% to 7% in 2023, bolstered by demand for its snacks and in emerging markets.
