* Says enters into 50:50 JV with Wilmar
* Says Wilmar to contribute to infrastructure, sales and
* JV to market Kellogg's and Pringles branded product
By Juhi Arora
Sept 24 Kellogg Co is expanding its
presence in China's fast growing breakfast and snack foods
market through a new joint venture with Singapore palm oil
producer Wilmar International, months after the U.S.
cereal maker sold its stake in a cookie and cracker manufacturer
in the country.
Kellogg said Wilmar will contribute infrastructure, supply
chain scale and its sales and distribution network in China to
the 50-50 joint venture.
The JV will market Kellogg's and Pringles branded products,
said the maker of Mini-Wheats and Rice Krispies.
D.A. Davidson analyst Timothy Ramey said the deal was a good
move, but said Kellogg has taken a long time to come up with an
actionable strategy in China.
Kellogg had acquired a majority interest in China's
Navigable Foods in 2008, however the business recorded operating
losses, resulting in Kellogg disposing its stake in the cookies
and crackers manufacturer in early 2012.
The U.S. maker of such products as Eggo waffles and Keebler
cookies said at the time that Navigable did not prove to be the
right vehicle for entry into the Chinese marketplace.
However, the company, which expects China to become the
largest food and beverage market globally within five years,
said it expects the Wilmar JV to be a "game changer."
Chief Executive John Bryant expects China's snack-food
market alone to reach an estimated $12 billion by year-end, up
44 percent from 2008.
This growth will be driven by the growing middle class
consumer base and an increased desire for a wide range of
packaged and branded foods, the company said.
China's Bright Food took control of British breakfast cereal
maker Weetabix in May, which includes brands such as Alpen
muesli and Ready Break, to cater to its rapidly growing home
"(Kellogg is) just terribly late to the party," analyst
Wilmar's wholly-owned subsidiary in China, Yihai Kerry
Investments, will participate in the joint venture, which will
be headquartered in Shanghai.
Kellogg's shares were trading flat at $51.50 on Monday
morning on the New York Stock Exchange.