Top cereal exec out at Kellogg

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Kellogg Co.'s top U.S. cereal executive abruptly exited last week in yet another round of upheaval at the embattled marketer.

The departure of Fred Jaques, exec VP-general manager, ready-to-eat cereal, comes after Kellogg scored three strikes on the new-product front this year, coupled with a promotional spending downturn that's triggered a serious volume decline.

Mr. Jaques, who didn't return calls, parts with Kellogg six months after John Cook, Kellogg president-North America, joined the company from McKinsey & Co., Chicago, where he headed its consumer practice.

No immediate successor was named. Bob Evans, chief financial officer for North America, will fill his role temporarily.


It's unclear whether the ready-to-eat shakeup will affect Kellogg's ad agencies, which include Leo Burnett USA, Chicago; J. Walter Thompson USA, New York; and the Martin Agency, Richmond, Va. Mr. Jaques was a key player in Kellogg's $400 million agency review last year, which brought Martin onto the roster.

Kellogg's former sr. VP-marketing Mr. Jaques was leading a movement at inject more snap, crackle and pop into advertising for its brands.

"My mandate is to bring energy and growth back to Kellogg," he said in an April interview with Advertising Age.

That manifested itself in innovative new ad approaches aimed at injecting brand personality, several creatively lauded. They include a tongue-in-cheek saga about Tony the Tiger groupies for Frosted Flakes and a well-received satirization of women's attitudes about their bodies for Special K.

The darkly humorous "Breakfast is back" Gen-X approach for Raisin Bran also has been notable for its boldly creative stroke, while its in-your-face tack for Smart Start launched one of Kellogg's few cereal home runs this year.


More common, however, were the flops. Kellogg scaled back distribution of its Ensemble line of functional foods. It's also discontinuing Breakfast Mates, a milk-and-cereal kit that fell short of expectations.

Country Inns, its new line of niche-targeted, upscale cereals, is said to be floundering.

"It doesn't seem their new-product innovation is working," said Credit Suisse First Boston analyst David Nelson.

He added that the company has said it would increase marketing spending but "they looked at the efficiency [of the spending increase] in May and it wasn't paying off. So they cut back and the volumes slid down again."

The gap between Kellogg and General Mills continues to narrow. According to Information Resources Inc. figures for the 52 weeks ended July 18, Kellogg's cereal dollar sales dropped 0.4% to $2.42 billion while Big G's rose 3.2% to $2.39 billion.

In its second-quarter earnings report issued July 29, Kellogg said its cereal volume fell 0.8% for the quarter and 3.9% for the year to date. By comparison, its convenience foods business grew 14% in the quarter and 13% year-to-date.


"My opinion is that there is no momentum at Kellogg," said Ken Harris, a consultant with Cannondale Associates who has worked with Kellogg's chief rival General Mills. "They're being hammered by analysts," he said, and "[President-CEO Carlos] Gutierrez is scrambling to jack up new products and get them out."

Mr. Harris likened the situation at Kellogg, which he called "an excellent company with the best brands in the business," to a shuttle launch.

"When everything works well they launch this 20-ton marvel into the sky and nobody thinks about it," he said. "Now, there's a leak in the O ring."

Copyright August 1999, Crain Communications Inc.

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