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Kellogg (K) Benefits From Brand Strength & Prudent Acquisitions

Kellogg Company K has strategically increased its presence through acquisitions to grow its portfolio. The convenience food maker’s portfolio strength, fueled by its efforts to undertake innovation is noteworthy.

Let’s delve deeper.

Prudent Buyouts Driving Growth

In line with the strategy to diversify its organic offerings, Kellogg acquired protein bar maker Chicago Bar Company in 2017. Chicago Bar Company makes RXBAR, considered one of the fastest-growing nutrition bar brands in the United States. The company’s Pringles buyout has been lucrative. With the Pringles deal, Kellogg transformed itself from a large U.S. snacks business to a true global snacks player. Kellogg also continues to expand its acquired brands through new product introductions.

Several other companies in the food space, like The Kraft Heinz Company KHC, Hormel Foods Corporation HRL and McCormick & Company, Incorporated MKC, are benefiting from acquisitions.

In April 2022, Kraft Heinz acquired a majority stake in a Brazil-based condiments and sauces company — Companhia Hemmer Industria e Comercio ("Hemmer"). The buyout has widened Kraft Heinz's International Taste Elevation platform and enhanced its presence across emerging markets. In January 2022, KHC acquired an 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The buyout enhanced its direct-to-consumer operations and go-to-market expansion.

Hormel Foods is strengthening its business through strategic acquisitions. In June, HRL acquired the Planters snacking portfolio from Kraft Heinz. Prior to this, it acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout was in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.

McCormick has strategically increased its presence through acquisitions and strengthened its portfolio. In December 2020, MKC bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand.

Solid Brands Aid Kellogg

Meanwhile, Kellogg’s portfolio consists of strong brands such as Pringles, RXBAR, Bear Naked, Cheez-It and Rice Krispies Treats, among many others. The company’s frozen foods brands like Morningstar Farms and Eggo have also been aiding growth. In its second-quarter 2022 earnings call, management highlighted that its world-class snacks brands continued to deliver robust performance across markets worldwide during the ongoing year.

Kellogg is augmenting its portfolio by adding more products under existing brands, innovation and marketing initiatives. The company is focused on investing in brand-building efforts. K invests in digital media, consumer promotions and traditional advertising. Kellogg has also been enhancing its in-store capabilities — like increasing the sales force of its struggling businesses.

We believe that such upsides coupled with a prudent acquisition strategy will likely keep Kellogg well positioned in the food space.

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