Kellogg and Mondelez are betting snacks are always in

Kellogg’s planned spinoffs of its North American cereal and plant-based foods businesses and Mondelez’s acquisition of Clif Bar point to a bigger bet on a corner of consumers’ pantries — snacks.

Why it matters: The two food giants are throwing their weight behind their snacking businesses because consumers are grazing more, either while they’re on the go, as a replacement meal, or when they’re seeking something healthy.

Driving the news: After the spinoffs, Kellogg will keep its global snacking, international cereal and noodles and North America frozen breakfast businesses intact.

• Monday, snack maker Mondelez said it will acquire Clif Bar for about $2.9 billion, adding Clif, Luna and Clif Kid to its portfolio, which includes Oreo cookies, Cadbury and Toblerone chocolate and Sour Patch Kids candies.

What they’re saying: Kellogg’s portfolio has been transformed by its acquisitions, partnerships and divestitures that have helped it reinforce its snacks business, it said.

• “The successful execution of these actions has expanded Kellogg’s portfolio, resulting in a scaled global snacking business and significant emerging markets presence, complemented by strong and profitable breakfast and plant-based foods businesses,” the company said.

What we’re watching: Kellogg is simultaneously exploring strategic alternatives for its plant-based foods division, which could be an acquisition target before it spins off, CEO Steve Cahillane said on CNBC Tuesday.

• Cahillane said he would be hunting for opportunities to add to the portfolio if it would add shareholder value.

By the numbers: The global market for snacks was estimated to be $493.4 billion in 2020 and is projected to increase to $732.6 billion by 2026, according to ReportLinker, a market research firm.

• Kellogg said its core snack business generated an estimated $11.4 billion in sales in 2021.

Meanwhile, the company's North American cereal unit, which includes Frosted Flakes, Froot Loops and Rice Krispies, garnered about $2.4 billion in sales in 2021.

• And the plant-based division, which includes the MorningStar Farms brand, had about $340 million in sales.
• The two companies have an “extremely good” path to value creation as independent entities, Cahillane said, noting a “very, very high bar” for any M&A exploration.

Of note: Mondelez’s energy bar acquisition comes fresh off its recent deal to buy the confectionary business of Grupo Bimbo, which includes Ricolino, Vero, La Corona and Coronado for a $1.3 billion price tag. That transaction is expected to close later this year.