Kellogg, W. K.

views updated May 29 2018

W. K. Kellogg

Born: April 7, 1860
Battle Creek, Michigan
Died October 6, 1951
Battle Creek, Michigan
Founder, Kellogg Company

W. K. Kellogg helped discover the process that gave the world flaked cereal, leading to a revolution in breakfast foods. His true genius, however, may have been as a marketer, not an inventor. By the time Kellogg launched his own company to sell toasted corn flakes, more than forty other companies were producing cold cereals. What helped set Kellogg's flakes apart was advertising, as Kellogg used every method possible to sell his "original" corn flake.

"Mr. Kellogg appreciated the power of the new force that was beginning to be used by progressive businessmen—
the force of consumer advertising. Visualizing his foods on breakfast tables in millions of homes, he knew that the entrée to these homes was chiefly through advertising."

—Horace B. Powell, biographer of W. K. Kellogg

Battle Creek Success Story

Willie Keith Kellogg was born in, Battle Creek, Michigan, on April 7, 1860, the seventh son of Ann Janette and John Preston Kellogg. Never liking his name, Kellogg later shortened "Willie" to Will. In business, however, he was usually known as W. K. His large family lived simply in Battle Creek, as his father struggled to build a broom-manufacturing business. By the time W. K. was thirteen, he was traveling to local grocery stores selling his father's brooms. Kellogg dropped out of school and worked in the broom business until 1880, when he joined his older brother, Dr. J. H. Kellogg, at the Battle Creek Sanitarium.

At his brother's health resort, Kellogg performed an assortment of roles, from accountant to repairman. His salary was low, despite the long hours he worked and the success of the sanitarium. A diary entry of Kellogg's from 1884 is quoted in his biography, The Original Has This Signature—W K. Kellogg: "I feel kind of blue. Am afraid that I will always be a poor man the way things look now." Little wonder that the younger Kellogg was discouraged since he had to support both his wife Ella and his mother on his small salary, Later, he and Ella had four children.

Kellogg's duties at the sanitarium included running his brother's book subscription service and managing Sanitas Food Company. Sanitas emerged from Dr. Kellogg's efforts to find nutritious food to serve his guests. The doctor built a test kitchen to experiment with new foods. In 1894, the brothers created a new breakfast product, toasted wheat flakes. W. K. Kellogg insisted the flakes be served whole instead of crushed, as his brother suggested.

Kellogg saw that producing cereals and other health foods could become a huge industry. Selling only by mail and using little advertising, Sanitas did well. Kellogg wanted to expand the business by advertising more, so Sanitas could compete with the new cereal companies popping up in Battle Creek. Dr. Kellogg, however, resisted the idea, just one of many instances where the two brothers clashed. Never close to his older brother, in 1906 W. K. Kellogg left the Sanitas Food Company to start his own business.

Some of the Kellogg company's early advertising featured a painting of a young farm girl holding corn. She was known as the "Sweetheart of the Corn." Billboards were also an important part of promoting Kellogg's cereal. In 1912, the company displayed what was then the world's largest advertising sign, standing 106 feet wide and 50 feet high.

The Original Corn Flake

Kellogg decided to concentrate on selling corn flakes, and he called his company the Battle Creek Toasted Corn Flake Company. He perfected the flakes by using corn grits instead of whole corn. Later he added malt to improve their taste. Kellogg once admitted that he didn't know much about selling cereal through grocery stores. But, in The Original Has This Signature—W K. Kellogg, Horace B. Powell quotes him as telling a colleague at the business, "I sort of feel it in my bones that we are preparing a campaign for a food which will eventually prove to be the leading cereal of the United States, if not the world."

Armed with that confidence and a commitment to advertise heavily, Kellogg first sold his flakes under the Sanitas name. On the box was the slogan "The original bears this signature," followed by "W. K. Kellogg" in Kellogg's handwriting. Within a year, Kellogg's name replaced Sanitas on the box, and sales were climbing.

Kellogg's success caught his brother's attention. In 1908, Dr. Kellogg changed the name of his food company to the Kellogg Food Company and began selling corn flakes overseas in packages similar to those his brother used. Business dealing between the two brothers, based on W. K. Kellogg's ties to Sanitas, also strained their relationship. In 1910, Kellogg sued his older brother; the court case dragged on for years. In the end, Kellogg won his suit, although he and Dr. Kellogg rarely spoke again for the rest of their lives.

Cereal Success

Corn flakes and other new products turned Kellogg's into the world's leading cereal manufacturer. Just as he did during his days at the sanitarium, Kellogg worked long hours, often walking through his factories to watch operations. He had a sharp eye for detail and always looked for ways to save money. He demanded hard work from his employees, and some found him distant, even mean. Yet Kellogg paid better-than-average wages for the time and would sometimes help relatives of workers struck by illness or other misfortunes.

In 1932, W. K. Kellogg gave most of his California ranch to the University of California. Today the ranch is part of the California State Polytechnic University and features a large library devoted to Arabian horses, which Kellogg once raised.

By the 1920s, the man who feared he would always be poor was one of the wealthiest business owners in the United States. He owned homes in Michigan and Florida and he raised horses on a ranch in California. Although he spent more time away from Battle Creek, he remained active in his company and the community.

In 1930, Kellogg used some of his fortune to start the W. K. Kellogg Foundation. A personal tragedy led to the founding of what remains one of the largest charitable organizations in the United States. Kellogg could not find good medical care for one of his grandsons, who was badly injured in a fall. His foundation, Kellogg said, would help families pay for the care of their injured and sick children. Soon after its founding, the Kellogg Foundation enlarged its focus, contributing to a wide range of charitable causes.

A Company Man Takes Control

In 1999, the Kellogg Company chose Carlos M. Gutierrez as its chief executive officer (CEO), and the next year it named him company chairman. Gutierrez, who first started working for Kellogg as a sales representative in Mexico, is one of the few Hispanic Americans to run a major U.S. corporation.

Gutierrez was born in Cuba in 1953. His father owned a pineapple plantation on the island, but the family left Cuba after Fidel Castro (c. 1927-) seized control of the government in 1959. The Gutierrezes fled to Florida and later moved to Mexico. In 1975, Gutierrez was attending the Monterey Institute of Technology when he joined Kellogg. Over the years, he worked his way up through the company, holding important executive positions in Latin America, Canada, and Asia, as well as Battle Creek. In 1990, Gutierrez was named a vice president, and he received several other promotions before taking control of Kellogg's.

One of Gutierrez's first moves as CEO upset some people in Battle Creek, as he closed the old corn flake plant in the city and fired hundreds of workers. He told the Associated Press, "These are painful but necessary decisions to make." At least one business analyst said the company should have made the move years before. Gutierrez then focused on increasing sales by expanding Kellogg's product line. In 2000, while appearing on the business news program Nightly Business Report, he said, "We see a great future beyond cereal." Gutierrez added, however, that cereal "will always be very significant to us."

Kellogg retired from the Kellogg Company in 1938, but he remained chairman of the board of directors. The year before, he had been diagnosed with glaucoma, an eye disease. His eyesight worsened, and he was blind for the last ten years of his life. With the help of a seeing-eye dog, he still visited the Battle Creek plant and participated in his foundation's activities. Kellogg died in 1951 at the age of ninety-one. Decades after his death, the signature of his last name still appears on Kellogg's products.

For More Information

Books

Powell, Horace B. The Original Has This Signature —W. K. Kellogg. Englewood Cliffs, NJ: Prentice-Hall, 1956.

Periodicals

Jones, Terry Yue. "Outside the Box." Forbes (June 14, 1999): p. 52.

"Kellogg's Recalls StarLink-tainted Corn Dogs." United Press International (March 15, 2001).

Murray, Barbara. "Cereal Bars Continue to Fly off the Shelves." Supermarket News (May 7, 2001): p. 123.

"One on One with Kellogg's CEO, Carlos Gutierrez." Nightly Business Report (February 23, 2000).

Sellers, Patricia. "How King Kellogg's Beat the Blahs." Fortune (August 29, 1988): p. 54.

Serwer, Andrew. "What Price Brand Loyalty?" Fortune (January 10, 1999): p. 103.

Taylor, Alex, III. "Kellogg's Cranks Up Its Idea Machine." Fortune (July 5, 1999): p. 181.

Willoughby, Jack. "The Snap, Crackle, Pop Defense." Forbes (March 25, 1985): p. 82.

Web Sites

Kellogg Company. [On-line] http://www.kelloggs.com (accessed on August15, 2002).

W. K. Kellogg Foundation. [On-line] http://www.wkkf.org (accessed on August 15, 2002).

Leading American Businesses

Kellogg, W. K.

views updated May 18 2018

W. K. Kellogg

American food industrialist Will Keith (W. K.) Kellogg (1860-1951) founded the company that bears his name after creating the world's first flaked cereal. His “Toasted Corn Flakes” laid the foundation for the later success of The Kellogg Company, which dominated the packaged breakfast food market in America for much of the twentieth century. Kellogg bested his competitors in a crowded field by relying heavily on advertising and promotional gimmicks, but he was an early pioneer in brand management, and more than a century after his company came into being in 1906, Kellogg cereal boxes still bear his distinctive signature as a logo.

Kellogg was born on April 7, 1860, in Battle Creek, Michigan, a city located about 110 miles west of Detroit. He was the seventh of sixteen children born to John Preston Kellogg and Ann Janette Kellogg, both of whom joined a burgeoning new religious group in the city known as the Seventh Day Adventists. This Protestant Christian denomination was known for observing its Sabbath, or holy day, on Saturday instead of Sunday, and members were urged to follow the church's recommended diet, which forbade meat, alcohol, and caffeine.

Dropped Out of School

Kellogg's father owned a broom manufacturing company in Battle Creek, and young Will went to work there at the age of 14, after leaving school. In marked contrast to his sixth grade education was Kellogg's older brother, John Harvey Kellogg (1852-1943), who graduated from New York University's Medical School in 1875, the year Will Kellogg turned 15 and was working as a broom salesperson. John Kellogg then returned to Battle Creek and took over what was known as the Adventist Health Reform Institute in 1876; he renamed the Battle Creek Sanitarium and it emerged as an internationally renowned center of holistic health. Taking the Adventist principles to a new level, John Kellogg advocated a lifestyle that relied on a vegetarian diet, fresh air, and plenty of exercise.

Kellogg went to work at the Sanitarium not long after completing a three-month program at Parson's Business College in nearly Kalamazoo in the early 1880s. With the fame of the Sanitarium spreading, John Kellogg had less time for its day-to-day operations, and he hired his younger brother to serve as business manager. “While Dr. Kellogg basked in celebrity and adulation, Will essentially ran the operation, working 15 hours a day, seven days a week,” wrote FSB journalist Paul Lukas. “He kept the books, bought supplies, answered correspondence, served as handyman and janitor, and filled mail orders for the sanitarium's many products. For his trouble, W.K. earned $6 a week (the most he would ever earn in 25 years of toiling for his brother was $87 a month).” Other accounts noted that when they were younger, John sometimes caned Will, and when they were older, the doctor also added “personal valet” to the list of his brother's duties, requiring him to give him his daily shave and shoeshine.

Accidentally Invented Flaked Cereal

Dr. Kellogg had some radical ideas about food and diet at the time, including a reliance on colonic irrigation for optimum health, and the belief that a diet rich in nut proteins was the key to longevity. In 1877 John devised a type of dry cereal he called Granula, to distinguish it from Granola, a name already trademarked by a New York State physician, and he and Will experimented with other grains. By 1894 the two were working with a boiled wheat paste that the doctor hoped would be more easily digestible for some sanitarium patients. One of the batches was accidentally left out for several hours, and dried out. They put it through the cereal-making rollers anyway and “were surprised to discover that instead of coming out in long sheets as it always had in the past, every wheat berry came out flattened into its own thin flake,” explained Rod Taylor, a writer for Promo magazine “After baking the flakes, the two realized—much to their delight—that they had stumbled on a whole new type of food.” This became the first world's first “flaked” cereal.

The Kellogg brothers sold the new cereal under the brand name Granose as part of the doctor's side venture, the Sanitas Nut Food Company. Patients at the sanitarium liked it so much they bought it by mailorder, too. Soon Will Kellogg became convinced that the factory, a barn located on the sanitarium grounds, needed to be moved to a separate location in order to safeguard their trade secret. The doctor, always conscious of a promotional opportunity, exhorted the sanitarium clients to visit the facility and watch how the beloved cereal was made. This led to a notorious incident in the history of American industrial espionage, when a man named C. W. Post (1854-1914) visited the sanitarium for health reasons, saw how the flaking process worked, and was inspired to start his own cereal company. Post Cereals, which later became General Foods, emerged as a major competitor to the Kelloggs, with its Grape Nuts cereal.

The long-simmering tensions between the two brothers began to reach a crisis point: Kellogg was so irate at his brother that he decided to establish a company separate from the sanitarium, but his doctor brother refused to finance it. They did, however, agree to try a new grain, and using corn instead of wheat to make the cereal proved a wise decision. They launched Sanitas Toasted Corn Flakes in 1898, which featured a picture of the Battle Creek Sanitarium on the box. In 1900, when John was out of the country for several weeks, Kellogg had a new factory built. When the doctor returned, he was reportedly so angry that he demanded Kellogg repay the amount immediately. But as Lukas explained, the cereal business was becoming immensely profitable. “A ten-ounce box sold for 15 cents, which meant the Kelloggs were turning a 12-cent bushel of grain into $6 worth of cereal.”

Founded Kellogg Company

As the company neared its ten-year anniversary, Battle Creek had become the cereal manufacturing capital of America, with scores of competitors, and the Sanitas brand lagged behind Post's products. Finally, John agreed to finance an entirely new company in return for a two-thirds share of its stock, and the Battle Creek Toasted Corn Flake Company was incorporated in February of 1906. Kellogg was now able to put into practice some ideas he had about advertising and promotion, and one of the first moves he made was to add his autograph to the box, with the tagline, “Beware of Imitations. None Genuine Without This Signature, W.K. Kellogg.” Corn Flakes were touted as a healthy breakfast food at a time when well-to-do Americans ate eggs and meat at that meal; the majority ate toast or various hot cereals such as porridge, farina, and gruel. To promote Corn Flakes in cities where it was about to set up a distribution channel, Kellogg took out newspaper ads in advance, which created demand for a product not yet on grocers' shelves. He even advertised nationally in women's magazines such as Ladies' Home Journal, which was extremely expensive, but the strategy worked and sales soared.

The first promotional giveaways in the cereal industry began with Kellogg, as a way to distinguish himself in a crowded field. It started with The Funny Jungleland Moving Pictures Book, an interactive picture book of animals for children. The books were delivered along with Kellogg cereal shipments to grocers, who gave one to every customer who bought two boxes of Corn Flakes. Later the boxes themselves had coupons that could be clipped and sent in for the book, which went through various editions and remained in print until the late 1930s. By 1912 the Kellogg Company had an advertising budget of $1 million, and it pioneered another strategy that year when it hired teams of marketers to give out samples of its newest cereal, Krumbles.

Kellogg continued to have serious conflicts with his brother over strategy and even corporate mission—John was strongly opposed to adding sugar to any of the products, for example. Finally, on another occasion when John was out of the country, Kellogg began buying up shares of the company stock that the doctor—still a notoriously frugal boss—had been using to pay some of his sanitarium employees. This gave him an ownership share of the company, but precipitated a falling-out between the brothers that worsened over time. Before John died in 1943, he wrote Will a conciliatory letter apologizing for some of his behavior, but the younger brother refused to open or read it until shortly before his own death in 1951.

Established Philanthropic Foundation

Sadly, the family problems continued through the next generation. Kellogg, who married in the early 1880s, had a son named John L. who joined the company as a young man. Like his father, he had an innovative mind and invented the wax-paper lining now common to all cereal boxes. However, he incurred his father's wrath when he divorced his wife to marry a Kellogg secretary. Kellogg forced John L. out of the company and groomed grandson John Jr. to take over, but the boy also proved a disappointment. John Jr.'s resignation precipitated the young man's mental breakdown, and he died by his own hand in 1938.

Kellogg believed that inherited wealth corrupts, and he used his private fortune to lavishly endow a private philanthropic foundation, which began attracting notice for funding various cancer studies. In 1932 he funded a school in Battle Creek for elementary students whose concept was so radical it earned this New York Times headline in 1932: “Normal and Handicapped Pupils Put Side by Side in New School.” Kellogg's one indulgence was a large ranch in Pomona, California, where he bred prized Arabian thoroughbred horses. Kellogg later donated this property as well, and the parcel of land eventually became California State Polytechnic University at Pomona.

Died at Age 91

In his later years, Kellogg experienced severe vision loss, and was completely blind by 1937. Two years later he retired as president of the Kellogg Company, as it was formally known by then, but remained on its board of directors. At his W.K. Kellogg Foundation, he kept an office and was still going there on a daily basis at the time of his ninety-first birthday, April 7, 1951. He died almost six months later, on October 6, 1951.

The W.K. Kellogg Foundation, including its original endowment of $60 million, became one of the top ten richest philanthropic organizations in the United States, and has been especially generous to its hometown of Battle Creek. Its assets were estimated at more than $7 billion in 2005, but a large part of that was in Kellogg Company stock, which had suffered financial hits in the late 1990s as consumers seemed to tire of the higher prices for Corn Flakes, Rice Krispies, and Frosted Flakes, especially when private-label competitor brands were much cheaper. The company, wrote Dana Canedy and Reed Abelson in the New York Times in 1999, “has been unable to get a grip on just how much people are willing pay for its cereals, especially when other boxes of corn flakes seem more like its brand than ever before. A few years ago, the company set off a price war, hoping to make up the lost profits through volume, but then struggled to raise prices again. In the end, the approach gave consumers sticker shock at grocery checkout lanes and benefited competitors like General Mills, whose strategy depended less on its pricing.” The same article noted that the management team in Battle Creek seemed paralyzed on how to move forward. “Kellogg is a funny company,” said a former executive who spoke with Canedy and Abelson only on the condition of anonymity. “As recently as the mid-90's, we were still asking what Mr. Kellogg would have done.”