Kellogg Chairman-CEO Arnold Langbo and ConAgra Chairman-CEO Phil Fletcher together unveiled Healthy Choice cereal. KELLOGG IS CONARGA'S NEW HEALTHY CHOICE

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NEW YORK-Kellogg USA President Gary Costley approached ConAgra Chairman-CEO Phil Fletcher at an industry meeting last year only to discover they were thinking about the same thing: a line of Healthy Choice cereals.

Both companies had researched the concept and believed there was a market for a ready-to-eat cereal under the aegis of ConAgra's $1 billion megabrand.

"It really was sort of a mutual idea," said Scott Rahn, VP-corporate development, who spearheaded ConAgra's involvement.

Consumers will prove them right or wrong this summer when Kellogg launches three Healthy Choice From Kellogg's cereals, unveiled here last week.

The news conference was the first big event Kellogg has hosted since introducing its ill-starred Heartwise cereal four years ago. The parallel is striking because with the help-and protection-of the Healthy Choice name, Kellogg is returning to an area it has been burning to re-enter since Heartwise's psyllium-based formula and aggressive health positioning provoked state regulators' ire.

Kellogg believes consumers have forgotten their feelings of betrayal about the late 1980s oat-bran hype and are more receptive to food products that push a health message.

"There was a lot of debate in the '80s about the relationship be-tween diet and health," Mr. Costley said in an interview. "The discussion will pick up again because of the debate about healthcare in this country and the push on prevention by the Clintons."

The Healthy Choice cereals-a multigrain flake, a honey-sweetened shredded wheat-style square and a multigrain mix with raisins, almonds and oat clusters-all are high in fiber, low in fat and have no cholesterol. Two are lower than typical in sugar content, and one has no salt. They will also be the first cereals to include both beta carotene and vitamin E.

"We can't make a hard claim on the anti-oxidants, but we know there's a growing awareness of the role they can play in reducing certain health risks," Kellogg Chairman-CEO Arnold Langbo said in an interview. "The cereal consumer is really going to respond to this."

The cereals will roll out nationally, with TV spots and newspaper ads from Leo Bur nett USA, Chicago, set to break in the summer. ConAgra's Mr. Rahn was involved with Kellogg Exec VP- Marketing Carlos Gutierrez in "capturing the Healthy Choice personality" and said the Burnett spots will have the look and feel of other Healthy Choice advertising, from Campbell Mithun Esty, Minneapolis. There will also be cross-promotions with other Healthy Choice products.

The Kellogg-ConAgra alliance makes for a blockbuster even though the coupling is odd. Kellogg is very conservative, single-minded and particularly careful about new products, while ConAgra's decentralized, entrepreneurial climate encourages product development without much fear of failure-and no shame attached to failures.

Though it's mostly licensing the Healthy Choice name, ConAgra and its flagship brand stand to gain more than Kellogg.

"It's a tremendous opportunity for Healthy Choice," Mr. Rahn said. "It gets us into the critical breakfast segment with a solid product."

ConAgra last year aborted its first breakfast attempt, a line of muffins and sandwiches, and didn't believe it could enter the cereal category alone.

"From a ConAgra perspective, it's a great alliance," said C.J. Lawrence Inc. analyst Timothy Ramey. "If it's $30 million or $50 million that Kellogg spends to launch these products, the ancillary benefit to Healthy Choice is tremendous."

The other 200 or so Healthy Choice products received about $30 million to $35 million in ad support last year.

The cereal segment, an $8 billion annual business, is the food industry's most profitable category.

"Even without a success, ConAgra wins," Mr. Ramey said. "But if it's a hit, it's a double win for them."

Healthy Choice is doing fine on its own. In 1993, unit volume across all categories was up 28%, according to Information Resources Inc.

Although some Wall Street analysts hoped for a fuller joint venture between the two food giants, they think it's possible a success in cereals could lead to jointly developed Healthy Choice frozen waffles, hot cereals or cereal bars. Neither company would comment on those possibilities.

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