USA AND EUROPE – Kellanova, a leading player in the global cereal industry, unveiled plans today to shutter two factories, one located in North America and another in Europe in a bid to streamline operations and enhance productivity.
The decision marks a strategic pivot for the company as it seeks to optimize its supply chain network and capitalize on emerging market dynamics.
The Kellogg’s brand owner outlined its intention to close the North American facility by the conclusion of 2024, followed by the cessation of operations at the UK-based factory by the end of 2026.
In a stock exchange filing, Kellanova emphasized its commitment to reorganizing the frozen supply chain network in North America, intending to bolster operational efficiency and meet evolving market demands.
The company anticipates that the consolidation efforts will yield substantial cost savings, with initial benefits projected to manifest in the latter half of 2024 and reaching full capacity by 2025.
The decision to realign its manufacturing footprint underscores Kellanova’s strategic focus on driving profitability and aligning its operations with evolving market dynamics.
By optimizing its production facilities and distribution channels, the company aims to enhance its competitive positioning and capture growth opportunities in the rapidly evolving consumer landscape.
As part of its strategic realignment, Kellanova will transition production to “facilities across the Americas frozen network” to ensure continuity in meeting volume requirements while driving operational efficiencies.
The announcement comes alongside Kellanova’s release of its 2023 financial results, highlighting the company’s commitment to transparent communication and strategic foresight in navigating market challenges and opportunities.
The Pringles maker, like other global packaged food makers, has been using its brand power to steadily raise product prices to protect margins from the impact of higher costs.
The company, formerly known as Kellogg, has seen no major pushback for its pricier products as consumers refrained from trading down to cheaper alternatives and were still willing to pay more for their favorite snack brands.
Kellanova’s product prices rose by 8.1% in the reported quarter, pushing its organic quarterly volumes down 1.2%.
The company reported net sales of US$3.2 billion in the fourth quarter. Analysts were expecting sales of US$3.08 billion, according to London Stock Exchange Group (LSEG) data.
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