Kellogg in JV with Wilmar to expand in China

Kellogg Co said it entered into a partnership with Singapore-based palm oil producer Wilmar International to manufacture and sell cereal and other snacks in China.

Kellogg said Wilmar will contribute infrastructure, supply chain scale and its sales and distribution network to the 50-50 joint venture, which will market Kellogg’s and Pringles branded product.
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 had said the acquisition did not prove to be the right vehicle for entry into the Chinese market place.

The company on Monday said it expects China to become the largest food and beverage market globally within the next five years.

“China’s snack-food market alone is expected to reach an estimated US$12 billion ($14.7 billion) by year-end, up 44% from 2008,” Chief Executive John Bryant said in a statement.

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.

Wilmar’s wholly-owned subsidiary in China, Yihai Kerry Investments will participate in the joint venture, which will be headquartered in Shanghai, China.

Kellogg’s shares closed at US$51.45 on Friday on the New York Stock Exchange.