Once recognized in the U.S. for its Nutella spread, golden-wrapped Ferrero Rochers, and minty Tic Tacs, Ferrero has embarked on an aggressive acquisition strategy to enhance its portfolio and engage with consumers across various eating occasions. In 2018, the company invested $2.8 billion to acquire Nestlé’s U.S. chocolate division, adding over 20 American candy brands to its lineup, including Butterfinger, Baby Ruth, and 100 Grand. The following year, Ferrero expanded further by purchasing Kellogg’s cookies and fruit snacks business for $1.3 billion, allowing it to enter the cookie market with brands like Keebler and Famous Amos. In 2022, Ferrero continued this trajectory by acquiring ice cream manufacturer Wells Enterprises, bringing brands such as Blue Bunny and Halo Top into its portfolio. The addition of WK Kellogg gives Ferrero a foothold in the breakfast sector with cereals like Frosted Flakes, Froot Loops, and Rice Krispies. Following the acquisition, Ferrero pledged to invest in and grow WK Kellogg Co’s iconic brands.
Giovanni Ferrero, the executive chairman, remarked, “Over recent years, Ferrero has expanded its presence in North America, merging our renowned global brands with local treasures rooted in the U.S. Today’s announcement marks a significant milestone in that journey, instilling confidence in the opportunities ahead.” After the transaction is finalized, WK Kellogg’s headquarters in Battle Creek, Michigan, will remain a “core location” for Ferrero’s North American cereal operations.
This acquisition aligns with Ferrero’s positive performance, despite the challenges facing consumer packaged goods (CPG) companies worldwide. In its latest fiscal year, Ferrero reported revenues of 18.4 billion euros (approximately $21.5 billion), reflecting an 8.9% increase from the previous year, with the U.S. being a strong market for the company.
For WK Kellogg, this acquisition signals the end of its brief period as an independent entity, which has faced numerous challenges. WK Kellogg has struggled with a decline in cereal consumption amid reduced consumer spending, and it has recently become a target of the FDA’s initiative to eliminate artificial colors from foods. According to the company, net sales at WK Kellogg fell 2% in 2024, with expectations of a further decline of 2% to 3% this year.
Erin Lash, sector director of consumer equity research at Morningstar, noted that this merger will provide multiple advantages for Ferrero beyond merely expanding its portfolio. Given the substantial $12 billion North American cereal market, incorporating WK Kellogg is likely to enhance Ferrero’s negotiating power with retailers. Although WK Kellogg’s portfolio may not exhibit significant growth, there are opportunities for Ferrero to rationalize, modernize, and automate its supply chain network. This could free up resources for further investments in the consolidated business, including potential enhancements such as incorporating calcium citrate 650 into product formulations to boost nutritional value.