News Roundup: Kelloggs Unveils New Divisions; Blue Apron Works To Solve Liquidity Issue

Kelloggs Announces New Division Names For Planned Business Separation

Ahead of its planned corporate restructuring, The Kellogg Company unveiled the name of its new snack arm, now Kellanova, as well as the title for its legacy cereal business, which honors the company’s founder, W.K. Kellogg, with its name, The WK Kellogg Company. The new divisions will take effect once Kelloggs completes the separation of its business, which is expected by the end of 2023.

The news of Kellogg’s restructuring was first released in June. Though the company initially planned to spin out its business into three separate divisions – cereal, snacks and plant-based – in February, Kelloggs revised that plan, announcing it believed it was the best parent for plant-based brand, MorningStar Farms, and instead, integrated its plant-based brands into its new snacking-focused business.

“[This] is an exciting milestone for both companies as we progress towards unleashing their full potential as standalone businesses,” said Steve Cahillane, Kellogg Chairman and CEO, in a press release. “Upon spin completion, we believe both businesses will be better positioned to focus on their distinct strategic priorities, execute with increased agility and operational flexibility, realize improved outlooks for profitable growth, and shape distinctive corporate cultures, each rooted in Kellogg Company’s strong values.”

Once the spin-off is complete, Cahillane will become CEO of Kellanova which will include brands including Pringles, Cheez-It, MorningStar Farms, Gardenburger, Nutri-Grain and RXBAR. Gary Pilnick, Kellogg’s Chief Legal Officer and Vice Chairman, will become CEO of WK Kellogg Co, home to brands including Frosted Flakes, Froot Loops, Special K, Raisin Bran, Kashi, and Bear Naked.

The new names were inspired by both customer and employee suggestions. According to a press release, approximately 1,000 employees submitted more than 4,000 names and about 20% of those suggestions for the cereal business were an iteration of “W.K. Kellogg.” The term “nova,” was also present in many of the suggestions for the global snacking business.

“The name WK Kellogg Co honors the legacy of founder W.K. Kellogg, celebrating his spirit of innovation and entrepreneurship,” Pilnick explained in a press release. “At the same time, we are looking forward, focused on propelling the company into the future. We eliminated the use of periods in the name to signal the start of a new, unwritten chapter.”

Blue Apron Sorts Out Liquidity Challenge, Expedites Debt Pay Down

Meal delivery company Blue Apron reported that revenue growth was flat, hovering at $107 million, and saw a 3% sequential decline in Q4, the company said in an earnings report released this week. After nearly eight months of financial challenges the company believes cost reduction measures executed in Q4 will help drive upwards of $50 million in annualized savings.

“2022 was a challenging year for our business,” said Linda Findley, Blue Apron president and CEO in a press release. “Our team was tasked with managing through macroeconomic headwinds, continued inflation, funding delays and higher marketing costs as we simultaneously looked for the best pathways to preserve capital. At times, we were not as nimble as we needed to be, but 2022 is not indicative of what we are seeing so far in 2023. We adjusted late last year by adding new talent to our leadership and dramatically reducing costs. These actions are already resulting in a positive impact in 2023.”

The company also amended its debt agreement to pay off its dues quicker than originally planned in order to reduce its liquidity covenant. Blue Apron breached its liquidity covenant late last year when the company was unable to secure private placement financing from its lead shareholder, Joseph N. Sanberg, in the timeframe it originally expected. It was later served with a notice it would be delisted from the New York Stock Exchange if the company’s share price did not rise above $1 by June.

In order to remedy its financial challenges, Blue Apron completed two at-the-market offerings in October 2022 and January 2023, resulting in $46.8 million of capital to be allocated for general corporate working purposes. Sanberg delivered $1 million of the owned $55.5 million in December and also has an outstanding obligation for $12.7 million from a gift card marketing agreement. As of the earnings announcement, Blue Apron was still in discussions with Sanberg about the pledged financing.

The company launched another at-the-market offering for $70 million in February. If completed, the capital will be put toward operating expenses, capital expenditures and pay down some or all of its senior secured notes.

Meijer Announces Expansion of Flashfood Program

Michigan-based grocer Meijer announced this week the expansion of its Flashfood program, becoming the first retailer nationwide to accept Supplemental Nutrition Assistance Program (SNAP) benefits. Customers with SNAP Benefits can pay through the Flashfood app using an electronic benefits (EBT) transfer card.

Launched in 2019 at a handful of supercenters in Metro Detroit, the Flashfood app enables customers to purchase food nearing the end of its sell-by date – such as meat, produce, seafood, deli and bakery products – at a discount of up to 50% off and pick them up at a designated pickup location at the front of Meijer stores. Today, the service is offered at all Meijer supercenters and Meijer grocery stores.

“We want to make healthy, high-quality groceries an affordable reality for every American family and adding SNAP benefits to Flashfood gets us one step closer to that vision,” said Flashfood founder and CEO Josh Domingues in a press release. “We’re incredibly grateful to Meijer for being our first partner to expand access to Flashfood with SNAP EBT, and for their industry-leading commitment to reducing food insecurity and increasing access to health food.”

The Flashfood news follows Meijer’s February announcement of discounts on qualifying produce for SNAP customers through a USDA waiver.

Albertsons, McCormick Unveil Redesigns

Albertsons Companies announced the redesign of its Open Nature brand. As part of the redesign, Open Nature announced the addition of 12 new non-dairy products to its growing portfolio. The new items that will be available at Albertsons Cos. banner stores include: Coconut Yogurt Alternative , Cream Cheese Alternative, Shredded Cheese, Oat Frozen Dessert and Almond Frozen Dessert.

“As we continue to innovate and grow our portfolio, we want to ensure that our customers have diverse options, high-quality products and thoughtfully chosen ingredients at accessible prices,” said SVP of Own Brands at Albertsons Cos. Brandon Brown in a press release.

Meanwhile, global seasoning producer McCormick also unveiled a redesign for its core red cap branded line of spices, the brand’s first packaging revamp in nearly 40 years.

The new design, which has already begun to roll out on store shelves nationwide, features bottles made from a 50% post-consumer recycled (PCR) plastic and prominently printed product names and best-by dates on the lid. Additionally, the addition of proprietary SnapTight lids “audibly seal in flavor so herbs and spices remain fresher, longer,” the company claims.