Kellanova invests US$61M to expand snack and cereal production in Brazil

BRAZIL – Kellanova, the snacks and cereals giant, has announced a R$360 million (US$61 million) investment in its São Lourenço factory to enhance production for brands like Pringles, Cheez-It, and Choco Krispis.

This follows a R$250 million (US$42.8m) investment in 2023 to expand Pringles production, bringing the company’s total investment in Brazil to over R$600 million (US$102.71m) in three years.

The funds will be directed toward process improvements, increased production capacity, advanced technology, and infrastructure upgrades.

“This investment underscores Brazil’s strategic importance in our global business,” said Victor Marroquin, Kellanova’s Latin America President since January 2024, in an interview with Valor.

Additionally, a partner company will invest R$20 million (US$3.42m) to build a new distribution center in São Lourenço do Oeste, Santa Catarina, set to open in July.

This location is home to Kellanova’s largest industrial park in Latin America and ranks among its top three globally.

The company also operates distribution centers in Joinville (Santa Catarina), Porto Feliz (São Paulo), Serra (Espírito Santo), and Rio de Janeiro.

Strengthening presence in Brazil

Over the past five years, the brand has grown fivefold in the country, with local production now meeting 90% of domestic demand and supplying some Latin American markets.

Last year, the company expanded its commercial operations in the Northeast, extending Pringles distribution across nine states.

However, despite its aggressive expansion, the company is not currently considering acquisitions. Its last acquisition was in 2016, when it purchased Brazilian food company Parati.

“These initiatives reflect our commitment to Brazil, even during challenging times,” Marroquin said.

He acknowledged the impact of rising interest rates, inflation, and a stronger dollar—now hovering around R$6 per USD—on production costs and consumer spending.

“The moment is challenging, but we have strong strategies to maintain brand value while offering affordable products,” he added.

Kellanova focuses on improving factory efficiency, reducing fixed costs, and adopting advanced production technologies to limit price increases.

A new chapter for Kellanova

Kellanova’s expansion in Brazil comes amid its transformation into a standalone company. In 2023, Kellogg Company separated its North American cereal business, now known as WK Kellogg, from its global snack division, forming Kellanova.

“This strategic move allows us to focus more on consumer markets and strengthen our presence in different regions,” Marroquin explained. 

From January to September 2024, Kellanova reported US$9.6 billion in global net revenue, a 3.2% decline from the same period in 2023.

However, in Latin America, net revenue rose to US$958 million, marking a 2.2% increase despite a US$20 million loss from exchange rate fluctuations.

The region saw 4.3% organic growth, driven by a 2% increase in volume and 2.3% from price and product mix adjustments. 

Looking ahead, Kellanova may undergo further transformation. In August 2024, Mars—the owner of brands like M&M’s, Snickers, and Whiskas—confirmed a nearly US$36 billion agreement to acquire Kellanova. 

The deal is pending regulatory approval, but Marroquin is optimistic about its opportunities.

“This merger will bring together two iconic brands with strong growth potential,” he said.

If approved, the acquisition could reshape Kellanova’s position in the global snack market, strengthening its competitive edge and expanding its reach in Latin America and beyond.

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