Venezuelan government seizes closed Kellogg cereal factory

By Stephen Daniells contact

- Last updated on GMT

© Getty Images / Photoprofi30
© Getty Images / Photoprofi30
After Alimentos Kellogg S.A. announced it was closing its facility in Maracay, Venezuela, the country’s government has seized the plant and will reopen it.

Due to Venezuela’s worsening economic situation, the US cereal giant announced earlier this week it would ceased operations in the troubled Latin American country.

President Nicolas Maduro slammed the move “absolutely unconstitutional and illegal”​, and said the factory would now be “producing with the industrial working class”​. Maduro, who has been in office since 2013 and is up for re-election on Sunday, told supporters his government has also begun judicial proceedings against the business leaders of Kellogg.

Closures

Kellogg has had a presence in Venezuela since 1961, and its facility in Maracay employed about 300 people. Venezuela was the company’s second largest market in Latin America after Mexico. Kellogg stated it hopes to return to Venezuela, “as soon as the conditions of the country allow it”​.

Prior to the pull-out, Alimentos Kellogg dominated the breakfast cereals sector in Venezuela last year with a 50% retail value share, according to Euromonitor International.

The market researcher also noted that the company was the number one in children’s breakfast cereals, with a 60% value share, and it also held the leading position in family breakfast cereals, with a 46% value share.

“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 also warned against sales of its brands “without the expressed authorization of the Kellogg Company”.

The moves follows similar exits from Venezuela by companies such as General Mills, Harvest Natural Resources, Coca-Cola, Bridgestone, Clorox, and Colgate, among others.