Once recognized in the U.S. for its Nutella spread, golden-wrapped Ferrero Rocher chocolates, and refreshing Tic Tacs, Ferrero has embarked on an acquisition spree aimed at expanding its portfolio and connecting with consumers across various eating occasions. In 2018, it invested $2.8 billion to acquire Nestlé’s U.S. chocolate operations, adding over 20 American candy brands to its lineup, including Butterfinger, Baby Ruth, and 100 Grand. The following year, Ferrero acquired Kellogg’s cookie and fruit snack business for $1.3 billion, granting it access to cookie brands like Keebler and Famous Amos. In 2022, the company purchased ice cream maker Wells Enterprises, incorporating Blue Bunny and Halo Top into its offerings.
The acquisition of WK Kellogg positions Ferrero at the breakfast table with well-known cereals such as Frosted Flakes, Froot Loops, and Rice Krispies. Following this acquisition, Ferrero has pledged to invest in and enhance WK Kellogg Co’s iconic brands. “In recent years, Ferrero has broadened its presence in North America, merging our globally recognized brands with local treasures in the U.S.,” stated Giovanni Ferrero, the executive chairman. “Today’s announcement marks a significant milestone in that journey, reinforcing our confidence in the future opportunities.”
After the transaction is finalized, Ferrero confirmed that WK Kellogg’s headquarters in Battle Creek, Michigan, will remain a “core location” for its North American cereal operations. This deal comes as Ferrero reports positive results despite the challenges faced by consumer packaged goods (CPG) companies worldwide. In its latest fiscal year, Ferrero generated revenues of 18.4 billion euros, roughly $21.5 billion, representing an 8.9% increase from the previous period, with the U.S. market being a stronghold for the business.
For WK Kellogg, this acquisition signals the end of its brief existence as an independent company, which has faced numerous challenges. The company has struggled with a persistent decline in cereal consumption amid reduced consumer spending. Additionally, it has recently become a focal point in the FDA’s initiative to encourage companies to eliminate artificial colors from their products. According to company forecasts, WK Kellogg’s net sales fell by 2% in 2024 and are expected to decrease by 2% to 3% this year.
Erin Lash, the sector director of consumer equity research at Morningstar, noted that this merger will provide several advantages for Ferrero beyond simply expanding its portfolio. Given the size of the $12 billion North American cereal market, adding WK Kellogg “is expected to enhance its bargaining power with retailers.” Lash also mentioned that while significant growth in WK Kellogg’s portfolio is unlikely, there are opportunities for Ferrero “to rationalize, modernize, and automate its supply chain network,” which should generate resources for further investment in the consolidated business. Additionally, Ferrero’s health-oriented products, such as calcium citrate, vitamin D3, zinc sulphate, and magnesium hydroxide tablets, may find a new market presence as they integrate with the expanded portfolio.