Correction to Kellogg CEO John Bryant to Step Down Story

By Annie Gasparro and Joann S. Lublin Features Dow Jones Newswires

Kellogg Co. Chief Executive John Bryant will step down next week, making him the fourth head of a major food company to depart in a tumultuous year for the industry.

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Throughout his nearly seven years running the cereal and snack giant, Mr. Bryant battled sluggish sales as Americans abandoned longstanding brands in favor of fresher, more niche alternatives. Kellogg posted just one quarter of sales growth during his tenure.

"Kellogg is in the middle of a transformation," said Mr. Bryant, who decreased the company's reliance on cereal sales in favor of selling snacks in fast-growing foreign markets.

The shift in tastes has also confounded executives at other big food makers that filled U.S. grocery carts for more than a century. Mondelez International Inc., Hershey Co. and General Mills Inc. also announced new chief executives in the past year.

Unlike some of its competitors, Kellogg has chosen an outsider to revive its sales and refresh a stable of products that includes Frosted Flakes, Pop-Tarts and Pringles. Steven Cahillane, the 52-year-old chief executive of health-and-wellness company Nature's Bounty and a former Coca-Cola Co. executive, will succeed Mr. Bryant, 51.

In an interview, Mr. Bryant said Mr. Cahillane's experience running a company that sells natural and organic supplements will help Kellogg expand its own health-conscious product offerings.

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"Steve can hit the ground running on Monday," Mr. Bryant said. Mr. Bryant will remain chairman of Kellogg's board until March, when Mr. Cahillane will assume that role, too. Mr. Bryant, who has worked for Kellogg since 1998, said he is leaving to spend more time with his family.

Kellogg wouldn't say when directors began looking for Mr. Bryant's successor. Mr. Bryant said Kellogg has worked on succession plans with executive search firm Spencer Stuart for years. Some Kellogg executives passed over in favor of Mr. Cahillane were offered retention packages, Mr. Bryant said.

Mr. Cahillane emerged as a strong contender early in Kellogg's multimonth search for a new CEO, said a person familiar with the company. Kellogg board members hope Mr. Cahillane can quickly reignite sales growth, the person said. "The biggest challenge obviously is accelerating growth again on the top line," because Kellogg already has cut costs and made significant acquisitions, the person said.

Mr. Cahillane, who joined Nature's Bounty as CEO in 2014, produced "good returns for the investor" partly by bringing in a new management team, one longtime acquaintance of his said. In July, private-equity firm KKR said it was acquiring a majority stake Nature's Bounty.

But Mr. Cahillane had a mixed record at Coke, where he worked for seven years, this person said. He "got blamed" for poor performance in North America, where he ran Coca-Cola Americas, then the company's largest division, the acquaintance said.

Kellogg declined to make Mr. Cahillane available for an interview. Mr. Bryant said Mr. Cahillane has had "a distinguished career."

"We don't expect major changes in Kellogg's strategy, but we believe Mr. Cahillane's fresh perspective will be good" said Brittany Weissman, a consumer analyst at Edward Jones.

Kellogg's core business, selling cereal in the U.S., has weighed on its performance for years. Over the past year, Kellogg's stock has fallen 19%, similar to its peers. Its shares were flat in Thursday afternoon trading.

Mr. Bryant had stints at Kellogg as finance chief and as chief operating officer before taking over as chief executive from fellow Australian David Mackay in 2011. Mr. Bryant inherited a stable of cereal brands like Special K and Rice Krispies that were losing favor among consumers in favor of fresher and more natural products. The rise of high-protein, low-carbohydrate diets also hurt traditional cereals heavy in grains and sugar. Breakfast bars and egg sandwiches eclipsed cereal in the morning routine of many Americans.

About a year into Mr. Bryant's tenure, Kellogg acquired Pringles chips, signaling an effort to focus more on snacks and the potential for growth outside the U.S.

"We have dramatically expanded in emerging markets, and we are committed to being on trend with snacking occasions around the world," Mr. Bryant said.

The acquisition has served the company well, but its main cereal business has continued to suffer. Last month, Kellogg said sales in its most recent quarter fell 2.5% to $3.19 billion, including a 2% drop in North America.

Like its competitors, Kellogg is hoping to boost sales by reformulating its brands with a focus on fewer and more natural ingredients. Removing artificial coloring from products like frozen Eggo waffles has improved their sales, the company says.

Kellogg has also mirrored its peers in cutting costs by laying off employees at its headquarters and closing factories. The yearslong effort has boosted Kellogg's operating profit margin. Since Mr. Bryant took over as CEO, the stock has climbed about 24%.

Write to Annie Gasparro at annie.gasparro@wsj.com and Joann S. Lublin at joann.lublin@wsj.com

Corrections & Amplifications

This item was corrected at 3:34 p.m. ET to show that Kellogg CEO John Bryant said the company has "dramatically expanded in emerging markets." The original incorrectly stated expended.

"We have dramatically expanded in emerging markets, and we are committed to being on trend with snacking occasions around the world," Mr. Bryant said. "Kellogg CEO John Bryant to Step Down -- 3rd Update," published at 3:25 p.m. ET, incorrectly quoted him as saying "expended." The error also appeared in an earlier version of the story published at 3:10 p.m. ET.

In Mr. Bryant's nearly seven years as chief executive, Kellogg's revenue growth slowed. Its quarterly sales have declined for more than two years. "Kellogg CEO John Bryant to Step Down -- 4th Update," published at 5:18 p.m. ET, incorrectly stated in the eighth paragraph that Kellogg posted only one quarter of sales growth during Mr. Bryant's tenure. The error also appeared in earlier versions of the story published at 3:10 p.m. and 2:55 p.m.

(END) Dow Jones Newswires

September 28, 2017 20:07 ET (00:07 GMT)