11 Jul 2025 A giant cereal step for Ferrero
Ferrero is looking to massively expand its US presence with an eye-catching move for US cereal business WK Kellogg, reportedly with a purchase price of around R55.8bn!
Ferrero has once again used M&A to expand into another part of the store – but will it pay off?
After The Wall Street Journal and Reuters reported on Wednesday (9 July) Ferrero was nearing an agreement to buy WK Kellogg Co, the Italian giant behind Nutella and Kinder announced on July 10 that the two had struck a deal.
Ferrero is to pay $3.1bn for WK Kellogg, the home of the Rice Crispies, Special K and Fruit Loops sold in North America.
With Mars in the middle of trying to buy Kellanova (EU regulatory scrutiny notwithstanding), the acquisition of WK Kellogg is set to mark the end of what was the old Kellogg Company as an independent outfit, a business with origins dating back almost 120 years.
Giovanni Ferrero, Ferrero’s executive chairman, said: “This is more than just an acquisition – it represents the coming together of two companies, each with a proud legacy and generations of loyal consumers.
“Over recent years, Ferrero has expanded its presence in North America, bringing together our well-known brands from around the world with local jewels rooted in the US.”
The deal is Ferrero’s latest move to expand its portfolio into other product areas – and to bolster its presence Stateside – through M&A.
In recent years, the company has broadened its stable of products through deals for companies including US ice-cream maker Wells Enterprises and the UK’s Burton’s Biscuit Company.
The Wells Enterprises acquisition is just one of a series of transactions Ferrero has done Stateside going right back to its acquisition of a clutch of confectionery assets (including some from Nestlé) across 2017 and 2018.
Just this year saw the Tic Tac brand owner acquire protein snacks maker Power Crunch in California. That built on the 2024 deal for the US biscotti biscuits business Nonni’s Bakery.
Brave move as cereal loses favour
It could be argued the move for WK Kellogg is the most eye-catching given the context of the market for breakfast cereals in the US, one no longer known for its Snap, Crackle and Pop.
Growth has long been hard to come by in the US breakfast-cereal category. GlobalData forecasts the value of the market will be $14.1bn this year, which, it says, would represent a five-year CAGR of 0.38%.
In 2024, WK Kellogg’s group net sales (on an underlying basis) dropped 1.1%. For 2025, it is forecasting another 1% decline.
When WK Kellogg’s management presented at the CAGNY conference in February, its immediate thesis for the business centred on a “stable” top line, improving its efficiency and growing margins and cash flow.
At CAGNY, the company also outlined its ambition to “accelerate” its sales growth with moves into product types deemed healthier (granola) and different formats (on the go). The challenge there is competition: not just from products in those areas but from other breakfast options. Cereal is no longer central to the morning rituals of Americans.
These considerations will now pass to Ferrero, although the new prospective new owner sounds upbeat. Lapo Civiletti, Ferrero’s CEO, said WK Kellogg Co “represents a meaningful addition to the Ferrero Group” and added: “Enhancing our portfolio with these complementary household brands marks an important step towards expanding Ferrero’s presence across more consumption occasions and reinforces our commitment to delivering value to consumers in North America.”
Civiletti’s remark about “consumption occasions” is key, not just for adding Ferrero a different type of product to its portfolio in and of itself but also for the opportunities for line extensions it could bring: one could easily imagine a line of Kinder or Nutella-branded cereals emerging from the Ferrero NPD department.
However, the more obvious potential benefits for Ferrero lie in scale: in a range of possible cost synergies and in the ability to take a bigger bunch of brands to US customers…..
Just-food.com: Read the full article here