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Is Cahillane The Healthy Choice For Kellogg?

Steve Cahillane moved into the corner office at Kellogg's of "Battle Creek" on Oct. 2nd. Will his outside experience help break the cereal maker out of its slump?

Kellogg’s and other cereal makers have struggled in recent years—in large part because of changing consumer tastes that are shifting away from sweet cereals and processed foods and toward what they see as healthy alternatives. Kellogg’s itself has had two and a half years of declining sales. Former CEO John Bryant fought back against these trends with cost-cutting and the addition of more healthy snack foods to the company’s portfolio, including the acquisition of the Pringles chip brand. Earlier this year, he wrote in an op-ed piece that Kellogg’s “will always be a cereal company at heart. However, changes in food industry dynamics and consumer needs in recent years have required us to think differently about our business, how we operate and the foods we make.”

That trend may have been his undoing, when, in a somewhat surprising move in September, Bryant announced his retirement as CEO of Kellogg’s for personal reasons. The snack and cereal company’s board decided to replace him with Steven Cahillane, an industry outsider—a choice that suggests how the company might respond to a changing industry.

Bryant, who turned over the reins of the top job on October 2, was with Kellogg’s for two decades, and its CEO for the last seven. He will stay on as chairman until March 2018, when Cahillane will assume that role as well.

For his part, Cahillane brings a wealth of outside experience to the job. Much of his career has been in the beverage business—including stints at Coca Cola and beer giant Anheuser-Busch InBev, and the founding of State Street Brewery in Chicago. Just before coming to Kellogg’s, he spent three years as the CEO of The Nature’s Bounty Co., the global manufacturer, marketer and distributor of vitamins, supplements and other health and wellness products. In that job, he was credited with keeping the company in touch with evolving trends in the field, and building an e-commerce division.

“Steve will need to be bold and work with his board to embrace a transformational agenda commensurate with the challenges.”

“Steve clearly has had a distinguished career leading successful CPG businesses throughout the world, including his terrific work recasting Nature’s Bounty as a consumer-facing health and wellness company,” said Donald Knauss, lead director of Kellogg’s board of directors.

“The food industry is undergoing a big transformation these days with changing consumer trends, omni-channel distribution and small specialized companies who are challenging the big food companies,” says Paul Winum, senior partner and co-practice leader of Board & CEO Services at RHR International. “Steve certainly understands these headwinds from his time at Coke and will bring lessons learned there to his leadership chapter at Kellogg’s. He will need to be bold and work with his board to embrace a transformational agenda commensurate with the challenges.”

The Kellogg’s board presumably tapped an outsider for the CEO role because it was looking for change—and Cahillane’s health-focused background could well be an indicator of the kind of plans he will be bringing to the company as he looks to turn things around.


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