Ferrero Reaches For The Cereal Bowl

Kellogg’s cereal products connected waste astatine a market shop connected 10 July 2025 successful Chicago, Illinois. Credit: Scott Olson/Getty Images.

Ferrero has erstwhile again utilized M&A to grow into different portion of nan shop – but will it salary off?

After The Wall Street Journal and Reuters reported connected Wednesday (9 July) Ferrero was nearing an statement to bargain WK Kellogg Co, nan Italian elephantine down Nutella and Kinder announced yesterday day (European time) nan 2 sides had struck a deal.

At a smidgen much than those reports suggested, Ferrero is to salary $3.1bn for WK Kellogg, nan location of nan Rice Crispies, Special K and Fruit Loops sold successful North America.

With Mars successful nan mediate of trying to bargain Kellanova (EU regulatory scrutiny notwithstanding), nan acquisition of WK Kellogg is group to people nan extremity of what was nan aged Kellogg Company arsenic an independent outfit, a business pinch origins making love backmost almost 120 years.

Giovanni Ferrero, Ferrero’s executive chairman, said: “This is much than conscionable an acquisition – it represents nan coming together of 2 companies, each pinch a proud bequest and generations of loyal consumers.

“Over caller years, Ferrero has expanded its beingness successful North America, bringing together our well-known brands from astir nan world pinch section jewels rooted successful nan US.”

The woody is Ferrero’s latest move to grow its portfolio into different merchandise areas – and to bolster its beingness Stateside – done M&A.

In caller years, nan institution has broadened its unchangeable of products done deals for companies including US ice-cream shaper Wells Enterprises and nan UK’s Burton’s Biscuit Company.

The Wells Enterprises acquisition is conscionable 1 of a bid of transactions Ferrero has done Stateside going correct backmost to its acquisition of a clutch of confectionery assets (including immoderate from Nestlé) across 2017 and 2018.

Just this twelvemonth saw nan Tic Tac marque proprietor get protein snacks shaper Power Crunch successful California. That built connected nan 2024 woody for nan US biscotti biscuits business Nonni’s Bakery.

It could beryllium based on nan move for WK Kellogg is nan astir eye-catching fixed nan discourse of nan marketplace for meal cereals successful nan US, 1 nary longer known for its Snap, Crackle and Pop.

Growth has agelong been difficult to travel by successful nan US breakfast-cereal category. GlobalData forecasts nan worth of nan marketplace will beryllium $14.1bn this year, which, it says, would correspond a five-year CAGR of 0.38%.

In 2024, WK Kellogg’s group nett income (on an underlying basis) dropped 1.1%. For 2025, it is forecasting different 1% decline.

When WK Kellogg’s guidance presented astatine nan CAGNY convention successful February, its contiguous thesis for nan business centred connected a “stable” apical line, improving its ratio and increasing margins and rate flow.

At CAGNY, nan institution besides outlined its ambition to “accelerate” its income maturation pinch moves into merchandise types deemed healthier (granola) and different formats (on nan go). The situation location is competition: not conscionable from products successful those areas but from different meal options. Cereal is nary longer cardinal to nan greeting rituals of Americans.

These considerations will now walk to Ferrero, though nan caller prospective caller proprietor sounds upbeat. Lapo Civiletti, Ferrero’s CEO, said WK Kellogg Co “represents a meaningful summation to nan Ferrero Group” and added: “Enhancing our portfolio pinch these complementary family brands marks an important measurement towards expanding Ferrero’s beingness crossed much depletion occasions and reinforces our committedness to delivering worth to consumers successful North America.”

Civiletti’s remark astir “consumption occasions” is key, not conscionable for adding Ferrero a different type of merchandise to its portfolio successful and of itself but besides for nan opportunities for statement extensions it could bring: 1 could easy ideate a statement of Kinder aliases Nutella-branded cereals emerging from nan Ferrero NPD department.

However, nan much evident imaginable benefits for Ferrero dishonesty successful scale: successful a scope of imaginable costs synergies and successful nan expertise to return a bigger bunch of brands to US customers.

“Acquiring WK Kellogg would springiness Ferrero a amended spot astatine nan array pinch US retailers, enabling them to do what they do best. Say what you will astir cereal: it whitethorn beryllium mature, but it is 1 of nan largest, astir highly penetrated categories successful nan store,” erstwhile General Mills executive and now consultant David Clark said connected Wednesday erstwhile nan WSJ and Reuters reports emerged.

Peter McDonald, different former-General-Mills-executive-now-consultant, believes nan ‘Big G’ whitethorn beryllium group to look a rejuvenated rival successful nan US breakfast-cereal market.

“Their superior competitor successful their halfway class has been comparatively uncompetitive for rather immoderate clip – first nether bequest Kellogg’s wherever snacking was nan priority, past arsenic a standalone institution pinch important separator and business exemplary challenges requiring attraction earlier immoderate superior maturation agenda,” McDonald said earlier this week. “Under caller (and privately held) ownership, that would surely change.”

And mightiness Ferrero’s move alteration nan dynamics of Mars’ move for Kellanova? The $35.9bn woody has received nan greenish ray from US regulators but is being investigated by title officials successful nan EU.

The European Commission said it has “preliminary concerns” nan transaction, which would bring together brands including Snickers and Pringles, could lead to higher prices for consumers successful nan bloc.

Clark suggests Ferrero could look arsenic a purchaser of Kellanova’s cereal business, arguing nan move “makes strategical sense”.

He adds: “Based connected Mars’ stated objectives for nan Kellanova acquisition, nan cereal business has small to contribute. For Ferrero, this presents a compelling, perchance self-funding opportunity: its world scale, US ambitions and nan synergies unlocked by bringing WK Kellogg and Kellanova’s world cereal operations backmost together could beryllium genuinely transformational.”

Under specified a scenario, it would beryllium down to nan EU’s watchful title officials to determine whether it would beryllium preferable for Kellanova’s cereals business to spell from 1 FMCG elephantine pinch a unchangeable of family favourites successful Mars to another.