(Bloomberg) -- Kellogg Co. will hold on to its MorningStar veggie burgers after all.
About seven months after the packaged-food giant said it was exploring a possible sale of its plant-based division, Kellogg said Thursday that it would hold onto it as the category’s performance erodes — potentially reducing the business’s value and appeal.
The company was considering a sale of MorningStar Farms when other plant-based meat companies were seeing “stratospheric” valuations, Chief Executive Officer Steve Cahillane said in an interview. But those valuations have dropped precipitously amid what he called a “shakeout” in the industry.
“This massive migration that some had forecast from people giving up meat and just going to meat analogues, you know the Beyonds and Impossibles and those of the world, has not migrated in the way that some had forecast,” Cahillane said, referring to plant-based companies Beyond Meat Inc. and Impossible Foods Inc. “Whether or not it ever will remains to be seen.”
Kellogg launched Incogmeato, a more meat-like product line partly sold in the refrigerated section of grocery stores, in 2020. It has seen less success than the original MorningStar Farms lineup, which is found in the frozen section, Cahillane said. “Every retailer had a different plan on how to handle this new category in the refrigerated space,” he said.
Supermarket sales of refrigerated meat alternatives fell 15% by volume for the 52 weeks ended Jan. 1, according to market-research firm IRI, while they declined 14% in dollar terms. In the frozen section, volume sales were down 3%, and dollar sales were up nearly 7%.
“There’s gonna be a retrenchment into frozen space, that’s where we’re really strong,” he said.
Earlier Thursday, Kellogg reported sales and profit that outpaced analyst estimates. The owner of Eggo Waffles and Pringles chips projects organic sales, which strip out items such as currency fluctuations, in a range of 5% to 7% this year.
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Author: Deena Shanker