Kellogg’s, the popular cereal brand, is undergoing a major transformation. The company has announced its decision to spin off its cereal business and shift its focus towards its snack unit. As part of this strategic move, Kellogg’s will be renamed as Kellanova. This decision comes amidst a growing trend in the food industry, where companies like J.M. Smucker are placing their bets on snacking.
Consumers today are increasingly grazing between meals, turning snacking into a widespread habit. Millennials and Generation Z consumers, in particular, are driving this trend, often opting for smaller meals consumed more frequently throughout the day. In response to these changing eating preferences, Kellogg’s is determined to tap into the snacking market and cater to these snack-happy demographics.
However, not everyone is enthusiastic about this shift. Investors are expressing concerns about the potential impact of obesity and diabetes drugs, such as Wegovy and Ozempic, on snack producers like Kellanova. These medications, which are designed to suppress appetites, have seen remarkable success, with millions of prescriptions being written in the US. Morgan Stanley estimates that by 2035, the number of patients taking these drugs could reach a staggering 24 million.
The increasing popularity of these appetite-suppressing drugs could potentially lead to a decline in consumption of baked goods and salty snacks, affecting companies like Hershey, Mondelez, PepsiCo, General Mills, and the newly formed Kellanova. This has sparked a lively debate within the industry, with some industry insiders suggesting that the impact might not be as significant as anticipated.
While the future remains uncertain, it is clear that Kellogg’s, now Kellanova, is taking a bold step towards adapting to the changing food landscape. The success of this transition will depend not only on the company’s ability to capture the snacking market but also on how it navigates potential challenges posed by emerging drugs like Wegovy and Ozempic. As consumers’ eating habits continue to evolve, only time will tell if snack producers can effectively respond to these changing trends and maintain their foothold in the market.