Splitting off its snacking division will help the Kellogg Company better compete against other food makers, CEO Steve Cahillane said atThe Wall Street Journal’s Global Food Forumin Chicago last week.

The executive said his company’s snacking division — which gets80% of its sales from brands such as Cheez-It, Pop-Tarts and Pringles — has not received recognition from investors despite growing sales26% year-over-year in its most recent quarter. But the CEO said he’s still optimistic.

“I’m not happy with our stock price performance, but go back and look at our results, it's been exceptional,”Cahillanesaid.

Since Cahillane took over as CEO in 2017, he’s been evaluating Kellogg’s portfolio. This led to the company’s announcement last June that itplanned to split its business.Cahillanepreviously told Food Dive he expects the separation to be completed by the end of this year.

Kellanova, the new name of its snacks business,will focus on products with and without a health halo — such as RiceKrispiesTreats andRXBar— for various consumer occasions, he said. Kellogg previously said it isrelying on the strength of its iconic brandsto grow in the space.

When asked at the WSJ conference how Kellogg’s new snacking business will tackle concerns over “ultra-processed foods” in its products, Cahillane said offering choice while promoting active lifestyles is more effective than trying to find a single answer.

“It’s not a simple solution where it’s just processed foods or soft drinks, or you name your villain of the moment,” Cahillane said. “If we as a country start to tell people the only way you can eat healthy is eating what you grow in your backyard, we’re not going to solve any problems.”

Recovering from the plant-based ‘implosion’

Cahillane said at the WSJ event thedecision to retain its plant-based business, led byMorningStarFarms — after initially saying it would split the division off — came after a dramatic “implosion” of the meat alternative sector. He said the “irrational exuberance” and high valuations in the space drove its initial decision-making.

“This category, when we looked at spinning off MorningStar Farms, was completely different than it is today,” Cahillane said. “We saw peers with valuations that were 30times greater than what they are right now.”

Cahillane说,凯洛格相信植物性是一个强大的美国卫生工程师协会(asse)t to keep under Kellanova. Kellogg plans to maintain MorningStar’s high household penetration as competitors in the space “that really never should have gained the distribution ... go away,” he said.

When asked how Kellogg’sdecision to discontinue its Incogmeato burgerearlier this year bodes for its broader innovation strategy, Cahillane said it was a “good idea at the wrong time,” given disruptions in the plant-based refrigerated space in 2020.

“If you’re afraid to take a swing in this, you’re not going to innovate very well,” he said.

Tackling decades-high inflation

Cahillane emphasized the importance of maintaining margins to Kellogg.He saidinflation during the last two years has prevented it from benefiting from its strong margin growth.

“We make no excuses or apologies for trying to protect our margins because the underlying health of a business can really be seen in its gross margin,” Cahillane said at the WSJ event.

After being questioned whether the prices of its products will go down if supply chain conditions improve, the executive said it remains to be seen. He added that getting to an equation where volume and value are more balanced is a priority.

“Pop-Tarts and Corn Flakes cost more than they did 50 years ago,” Cahillane said. “Inflation comes in cycles, and this is a cycle we haven’t seen for 40 years.”