Ferrero to buy Froot Loops maker for $3.1bn – because who doesn’t want chocolate for breakfast?

Yes, that Ferrero. The one behind Nutella, Ferrero Rocher’s gold-foil status symbols and those Kinder toys your parents always regretted buying. Apparently, they want in on your breakfast, too.

This all-cash deal will fold WK Kellogg’s iconic American cereal brands under Ferrero’s privately owned empire, marking the latest in a string of acquisitions that has turned the once regional Italian chocolatier into a global snacking juggernaut. After all, who wouldn’t want to round out their dessert portfolio with something that’s 40% sugar before 8am?

WK Kellogg, based in Battle Creek, Michigan, was spun off just last year from Kellogg Company. The split left the classic cereals in one bucket (WK Kellogg) while snacks like Pringles and Pop-Tarts headed to the newly minted Kellanova. If that sounds like corporate Jenga, it’s because it is – and Ferrero just pulled out the cereal block.

A bet on breakfast (and North America)

Ferrero’s executive chairman Giovanni Ferrero described the deal as “a key milestone” in expanding the company’s North American footprint. Translation: they want more grocery-store shelf space in the US, and they’re not afraid to buy it.

It’s not their first rodeo, either. Ferrero has been gobbling up American brands like a kid at Halloween. In 2018 they bought Nestlé’s US candy lines (Butterfinger, Baby Ruth). In 2019, they snagged Kellogg’s cookie business (Keebler, Famous Amos). Then came ice cream maker Wells Enterprises (Halo Top) in 2022.

Now they’re taking on cereal – a category that’s frankly been having a rough morning.

Sugary cereals need a glow-up

Breakfast cereal sales have been on a slow decline as parents realize, belatedly, that “part of a balanced breakfast” was mostly marketing speak for “a bowl of sugar with some vitamins sprinkled in.” WK Kellogg’s revenues were around $2.7 bn last year but growth has stalled.

The company even drew fire last year when chief executive Gary Pilnick suggested on CNBC that families fighting food inflation could eat “cereal for dinner” – which, to be fair, may soon be reality if Ferrero introduces Nutella-flavored Froot Loops.

On paper, there’s logic to this. Ferrero knows indulgence branding like no one else. Their marketing machine could revive dusty cereal boxes with fresh positioning as all-day snacks (who really eats breakfast at breakfast time anymore?). And with existing distribution muscle in North America, they can push these brands beyond the breakfast aisle.

But there’s also something undeniably funny about an Italian chocolatier swooping in to rescue an American cereal brand whose big innovation lately has been “cereal as dinner.” It’s globalization at its sweetest, weirdest best.

What’s next?

After the deal closes later this year (pending regulatory approvals), WK Kellogg will delist from the New York Stock Exchange and become a wholly owned Ferrero subsidiary.

So yes: your Froot Loops, Rice Krispies and Frosted Flakes will soon belong to the same company that makes Nutella, Tic Tac, Kinder eggs and Ferrero Rocher.

Breakfast, meet dessert. It’s about time you two got together.