The Battle Creek, Mich.-based company announced last summer it would split into three parts and base the largest of the three in Chicago, but CEO Steve Cahillane says plans have changed. The company is now splitting in two. Chicago is getting Kellanova, a $14 billion business that includes big household names like Pop-Tarts, Pringles, Eggo, Rice Krispies Treats, Cheez-It, RXBar and Morningstar.
The smaller, $2.5 billion business, which includes Fruit Loops, Frosted Flakes and the company’s other iconic cereals, is also getting a new, more traditional name: WK Kellogg Co., named for the company’s founder.
Cahillane told Crain’s that ideas for the new names came from a mixture of employee feedback and executive innovation. Thousands of employees suggested the “WK Kellogg” name in a survey, he said. And “nova” was a popular response for the snacking company’s name. It speaks to the company’s new beginning, he said.
“It’s a break from the past while also respecting and revering our past,” he said. “So really, it’s about the future.”
The split is on track to be completed in the fourth quarter, Cahillane said. The new names will be official then. Until today, Kellogg had internally been calling the companies North American Cereal Co. and Global Snacking Co., which did not spark much excitement.
Brand names will not change, so customer confusion in grocery aisles is not anticipated, Cahillane said.
Initially, Kellogg planned to spin out a third business, which it called Plant Co., that included its MorningStar Farms plant-based food brand.
“We decided to keep it,” Cahillane said. “We went through all the work and determined it is really much more valuable inside.”
Separating Kellogg’s snacking and North American cereal businesses will help unlock their value, Cahillane said. The company wasn’t getting “a lot of credit for being a predominantly snacking-led, fast-growing business.”
Kellogg has been ramping up its global snacks business since acquiring Pringles from Procter & Gamble in 2012. The tubed chips gave Kellogg seemingly endless flavor options to innovate with and gave the company insights into emerging markets. Other deals have followed, as have expansions into more countries.
After the split, Cahillane will remain CEO of Kellanova. Gary Pilnick, who is currently Kellogg’s chief legal officer and a 23-year veteran of the company, will head WK Kellogg.
Kellanova’s move to Chicago won’t change Kellogg’s presence in the city much, Cahillane said. Kellogg already has about 300 employees in the Chicago area, and it is not asking Battle Creek-based workers or executives to relocate. Kellanova’s new headquarters will be at 412 N. Wells St., which Kellogg already leases. (The space was once RXBar’s headquarters, and Kellogg bought that company in 2017.) It also has an office in Naperville.
Cahillane has owned a home in Chicago since 2018. He sold the Lincoln Park house for $6.2 million last summer. Cahillane said he bought another home in the city, but declined to disclose the location.
Kellogg’s decision also bolsters Chicago’s standing as a hub for packaged-food companies. Global Snacking will join food industry stalwarts such as Kraft Heinz, Conagra and Oreo-maker Mondelez. Chicago officials have long touted the sector as one of the city’s strengths and say the density of companies can make it easier to attract talent.
There has long been speculation about the operational role of far-flung Battle Creek. Moving Kellanova’s headquarters to Chicago gets the global closer to an international airport, but the Battle Creek presence “remains very important to us,” Cahillane said.
“We learned during the pandemic people can work anywhere,” he said. “We’re going to choose to make the investments that would otherwise be made moving people against growing our brands, against our capital, against travel.”