In a move that surprised some analysts, Kellogg Co. late Thursday announced that its board of directors had elected Steven A. Cahillane as CEO, succeeding John A. Bryant, who will retire effective Monday.
Cahillane most recently served as president and CEO of The Nature's Bounty Co., a leading vitamin and supplement business, and is a former executive with Coca-Cola and AB lnBev.
Bryant, a 20-year Kellogg veteran, had been CEO for seven years. He helped to pivot the company’s portfolio toward trends in snacking, including the acquisition of Pringles in 2012, and was behind decisions to address costs, including the surprise elimination of direct-store-delivery for its cracker business earlier this year. But sales remained under pressure despite Bryant’s repositioning.
Andrew Lazar, a Barclays analyst, in a research note called the move “rather unexpected,” but acknowledged the recent completion of the DSD teardown provided an appropriate point to make a change.
Lazar said investors would watch to see whether Cahillane chooses to maintain Bryant’s stated 18% margin targets, or invests more to address topline sales.
“Given the challenging operating environment (from both a consumer and customer perspective) and an organic top-line that is still in negative territory, frankly, we would not be surprised if an incoming CEO … takes the opportunity to instead invest more significantly to try and jumpstart the top line,” Lazar said.
Cahillane, 52, is the first outside hire to take the reins at Kellogg in 13 years. Bryant in a statement called his successor a “proven leader with an exceptional track record of creating shareholder value.”
Cahillane has been leading Nature's Bounty since 2014. In this role, he successfully aligned the company with key health and wellness trends, established a thriving e-commerce division and created significant shareholder value, Kellogg said.
Prior to this, Cahillane spent seven years with Coca-Cola, most recently serving as president of the $25 billion Coca-Cola Americas division. He previously spent eight years with AB lnBev, the world's largest brewing company, in various senior leadership roles including chief commercial officer, and CEO of the Interbrew U.K. and Labbatt USA subsidiaries.
"It has been my pleasure to serve as the CEO of Kellogg Company over the past seven years," Bryant said. "I am even more confident in the future of our company today than at any other time in my 20 years with Kellogg. I've decided that the time is right to hand over the reins to a new leader who can continue the transformation of this great company.
"Today, it's my pleasure on behalf of the Kellogg Board to welcome Steve," Bryant continued. "He is a proven leader with an exceptional track record of creating shareholder value. Steve has a tremendous history of success as the CEO of Nature's Bounty, a health and wellness company, as well as in senior leadership roles around the world at blue-chip consumer packaged goods companies including Coca-Cola and AB lnBev."
"Kellogg is an incredible company with a rich legacy and iconic brands that are beloved around the world," Cahillane said in a statement. "It will be my privilege and honor to work with such a talented group of employees as we pursue the tremendous growth opportunities before us."
Also on Thursday, Battle Creek, Mich.-based Kellogg affirmed previously announced financial guidance, including expectations of a 3% sales decline in the fiscal year.