Kellogg ceases business activities in crisis-wracked Venezuela

By Gill Hyslop contact

- Last updated on GMT

The Frosties maker is the latest multinational to pull out of debt-ridden Venezuela. Pic: ©GettyImages/Alex LMX/Kellogg
The Frosties maker is the latest multinational to pull out of debt-ridden Venezuela. Pic: ©GettyImages/Alex LMX/Kellogg

Related tags: Kellogg company, Venezuela, Cereals, Recession, Economy

Kellogg Co. has closed its operations in Venezuela amid hyperinflation, lack of raw materials and social deterioration.

Alimentos Kellogg S.A. has shuts the doors of its a facility in Maracay, Venezuela, that employs approximately 300 people.

Kellogg has had a presence in Venezuela since 1961, and the market is its second largest in Latin America after Mexico.

According to Euromonitor, Alimentos Kellogg dominated the breakfast cereals sector in Venezuela last year with a 50% retail value share.

  • In children’s breakfast cereals, it ranked first with a 60% value share, with Kellogg’s Zucaritas commanding a 31% value share and Kellogg’s Froot Loops and Kellogg’s Choco Krispies controlling a combined 30% share.
  • In family breakfast cereals, Kellogg’s Corn Flakes also held the leading position in 2017 with a 46% value share.

The US-based cereal giant is the latest multinational to close or reduce operations in Venezuela as the country is gripped in a recession and widespread hunger.

It follows similar moves by General Mills, Kimberley-Clark and Havest Natural Resources, among others.

“The current economic and social deterioration in the country has prompted the company to discontinue operations. All assets, contractual obligations and legal guarantees have been settled with Kellogg’s employees, suppliers and customers in Venezuela,”​ said Kellogg in a statement.

The company added product distribution in Venezuela has been suspended and the license agreement for the use and commercialization of its brands and characters in Venezuela has been terminated.

Unconstitutional

The move has drawn rebuke from socialist President Nicolas Maduro who has accused the company of trying to sabotage his chances of getting re-elected.

“We've begun judicial proceedings against the business leaders of Kellogg's because their exit is unconstitutional," ​said Maduro.

“I've taken the decision to deliver the company to the workers in order that they can continue producing for the people.”

Kellogg said it hopes to resume operations once conditions have improved in the country and warned against sales of its brands “without the expressed authorisation of the Kellogg Company.”

Social and economic upheaval have made operating in the country difficult for foreign companies.

Its battered economy has been hit by falling oil revenue and the plummeting value of its currency, the bolivar.

The South American country has one of the highest rates of inflation in the world. In the year to the end of February 2018, prices rose by more than 6,000%, according to the opposition-dominated National Assembly.

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