Business Strategies

Post Foods On Its Own


Mar 04, 2012

After being owned by one big food company or another since 1929, Post Cereals is master of its own destiny after spinning itself off from Ralcorp Holdings Inc. on February 6.

Legally Post Holdings Inc. but calling itself Post Foods, the company is headquartered in the St. Louis suburb of Brentwood, Mo. William Stiritz, who was chairman of Ralcorp and earlier was president/CEO of semi-predecessor Ralston Purina, is chairman and CEO.

Eighty percent of the stock was given to Ralcorp shareholders, at a rate of one share of Post common stock for every two shares of Ralcorp common stock. Ralcorp retains the other 20 percent. In late February, Post had a market capitalization of $1.09 billion. Ralcorp paid Kraft $1.65 billion in stock and assumed $950 million in debt for a valuation of about $2.6 billion.

The new company is expected to have annual sales between $800 million and $1 billion.

Charles William Post started the company in Battle Creek, Mich., in 1895 with the introduction of his Postum cereal beverage. He eventually acquired Shredded Wheat, which predated his company by three years. His Postum Cereal Co. changed its name to General Foods Corp. in 1929 after several acquisitions. Then General Foods was acquired by Philip Morris Cos. and merged with the latter’s Kraft Foods unit – where Post remained until it was sold in 2007 to Ralcorp – ironically the former maker of Ralston cereals.

Post’s largest brand, Honey Bunches of Oats, is the second largest brand in the cereal category behind General Mills’ Honey Nut Cheerios. However, sales dipped 9 percent last year, according to SymphonyIRI quoted in Ad Age. But the new Post has aggressive marketing plans and already has rolled out line extension Honey Bunches of Oats Fruit Blends (see p.24). It also makes Pebbles, Post Selects, Great Grains, Spoon Size Shredded Wheat, Post Raisin Bran, Grape-Nuts and Honeycomb.