Kellogg Makes Second Try at Chinese Market

by Christopher Freeburn | September 24, 2012 10:52 am

Kellogg (NYSE:K[1]) is going back to China[2].

The iconic American cereal maker said that it has formed a joint venture with Wilmar International (PINK:WLMIY[3]) to produce and market packaged food products in China, Reuters noted.

Company officials predicted that within five years, China will emerge as the biggest food and beverage market in the world.

This will be Kellogg’s second attempt to establish itself in China. It purchased a controlling stake in a Chinese food company in 2008, but sold that interest earlier this year after sustaining continuing losses.

Wilmar, based in Singapore, will leverage its supply chain and network of distributors inside China, including its Chinese subsidiary Yihai Kerry Investments. The partnership will be based out of Shanghai.

The joint venture will produce and sell Kellogg’s branded cereals and other products as well as Pringles potato chips.

Shares of Kellogg were mostly flat in Monday morning trading.

Kellogg isn’t the only American food maker looking to expand into China. Snack food and beverage giant PepsiCo (NYSE:PEP[4]) has announced plans to invest $2.5 billion in China over the next three years[5], conducting research to adapt its products to satisfy local Chinese tastes.

Endnotes:
  1. K: http://studio-5.financialcontent.com/investplace/quote?Symbol=K
  2. going back to China: http://www.reuters.com/article/2012/09/24/us-kelloggco-jointventure-idUSBRE88N0EX20120924
  3. WLMIY: http://studio-5.financialcontent.com/investplace/quote?Symbol=WLMIY
  4. PEP: http://studio-5.financialcontent.com/investplace/quote?Symbol=PEP
  5. in China over the next three years: http://investorplace.com/2012/07/pepsi-adapts-to-chinese-snack-tastes/

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