Kellanova's Commitment to Brand Spending Should Ensure Competitive Edge

After untangling its operations, Kellanova has centered its strategic playbook almost exclusively on its global snacking portfolio. But we don't think it will abandon its focus on increasing investments in its capabilities and brands while extracting inefficiencies. We think it will continue to judiciously tailor its mix to expand pack size options to extend its distribution at home and abroad. However, management's motivation for the split from the cereal business lacked substance, in our view. The primary driver appeared to be unlocking a higher multiple for the faster-growing snack business now that it's unencumbered by the mature North American cereal brands.