Kellogg is hoping to turn cereal into a breakfast staple in China.
The maker of Frosted Flakes, Pop-Tarts and Eggo waffles says that it formed a joint venture to sell more cereals and snacks in the country as early as next year.
The breakfast giant says the deal will tap the infrastructure and local expertise of Wilmar International, a Singapore-based agribusiness, to expand its presence in China.
The Battle Creek, Michiganbased company also plans to sell its Pringles chips through the joint venture. Kellogg acquired Pringles from Procter & Gamble Co. earlier this year, in a deal intended to expand its footprint overseas.
Kellogg Co. currently gets most of its revenue from North America, where growth in the packaged-food industry has been relatively weak. But like other companies, Kellogg is increasingly casting its sights on developing markets such as China and India, where the appetite for convenience foods is growing more quickly.
Kellogg notes that China is expected to be the largest food and beverage market within the next five years, as the ranks of middle-class consumers continue to multiply in large cities. As for cereal, which is not traditionally eaten in China, the company says consumption is rising as milk becomes a more common part of the diet.
General Mills Inc., the maker of Cheerios and Wheaties, already has a joint venture with Cereal Partners Worldwide to sell several of its cereals in China.
In an emailed statement, Kellogg noted that it has sold "ready-to-eat cereal in the China market for quite some time."
Kellogg says it hopes to start operating the joint venture Jan. 1, pending regulatory approvals.
For now, Europe remains Kellogg's largest international market. But the company is seeing weakness in the region, with its international sales in the second quarter down 3.8 per cent.
The Pringles acquisition catapulted Kellogg to the world's second-biggest salty snack maker, after PepsiCo Inc.'s Frito-Lay.
Shares of Kellogg were up four cents at $51.49.
