Kellogg to expand in China through cereal and snacks JV with Wilmar

Kellogg Co is setting up an equal joint venture with Wilmar International Ltd for the manufacture, sale and distribution of cereal and snacks in China, as the worlds leading breakfast cereal maker looks to expand in the world's most populous country.

Under the terms of the JV, Wilmar, Asia's leading agribusiness group, will contribute infrastructure, supply chain, an extensive sales and distribution network in China, as well as local China market expertise to the joint venture, while Kellogg will contribute its portfolio of brands and products, along with its expertise in cereal and snacks.

The JV, which will be based in Shanghai, will use Kellogg's and Pringles brands and both companies will leverage their expertise to obtain marketing and manufacturing synergies.

Kellogg, which makes Keebler cookies, Cheez-It crackers and Special K Cracker Chips, said that China is expected to become the largest food and beverage market globally within the next five years, driven both by the growth of a middle class consumer base in large cities and an increased desire for a wide range of packaged and branded foods.

Cereal consumption is currently being driven by rapid growth in milk consumption, along with consumers' desire for healthy and convenient breakfast foods and snack foods also represent a very large growth opportunity, according to Kellogg. 

"China's snack-food market alone is expected to reach an estimated $12 billion by year-end, up 44 per cent from 2008," said John Bryant, Kellogg's president CEO.