it's March, two thousand in a demolition crew. Is it work on Porter Street in Battle Creek Michigan, a small group of former logs watches as a wrecking ball slams into their former workplace. The company's south plant five months ago. Factory will Kellogg built in one thousand nine hundred and seven made its final batch of corn flakes now the breakfast that built the company is being made far away from cereal City the wrecking ball pounds the facility to rubble tears well up in the eyes of former workers, it's the end of an era. The company is on its knees, Kellogg's long Reign as America's serial king is over. Its stock price is depressed and profits are gone,

copycat. Cereals are feasting on its biggest brands companies laying off workers Bing morale of those who remain, but three miles away in Kellogg's headquarters, CEO Carlos Gutierrez makes a phone call. He hopes will help restore, The company to glory since joining Kellogg's in nineteen? Seventy five, this Q refugee with a Burt Reynolds Mustache, is one of the top job. Now that he's in the hot seat he's shaking things up in the Ask Kellogg's barometer of success. Was the amount of cereal sold now Gucci? this has got every executive focusing on dollars earned. It sounds simple but by changing the measure of success from quantity to currency good, This is altering the seven billion dollar companies entire worldview, now executive To use to push hi ball

in low margin. Cereals, like rice Krispies, are focusing on the high mark products Gutierrez believes are so road to recovery, and that's, why he's on a conference call with Bill and Gail Tober there but wife team behind Kashi, a small company based in La Jolla, ca, that's built a cult following among health, conscious consumers for it's all natural whole grain and sesame seed. Cereals t outlines what will happen if the toppers cell Kashi the Kellogg's You keep doing what you're doing koshy stay in La Jolla, operating an independent unit within Kellogg's, but get to use our distribution manufacturing and research infrastructure to accelerate your growth bill. Where is interested but cautious? What this by Kellogg's All natural cereal has major growth potential. We believe

The Koshi name appeals more to consumers of these cereals than Kellogg's Gutierrez. Is working on more than just a hunch. Last General Mills launched an organic cereal, called Sunshine natural, I'll double took one look at the general mills, big blue g logo on the box and snap. It these consumers don't just want cereal free from artificial ingredients. They I want cereal free from multinational food giants. Two after the tab, convert for a moment. Gail, back on the line. Okay, we're interested three months later in June, Two thousand Kellogg's Liza Koshy for thirty three million dollars Gutierrez knows Koshy, is a long term bet what he needs right now is a product that can push general mills from its new position as the nation's top cereal maker. Luckily,

Kellogg's european operations have exactly the breakfast option he needs and it's a blast from the past. Support for business comes from capital, one with spark. Card from capital one, you earn unlimited two percent cash back on all of your business purchases, think about it. Unlimited two percent cash back on everything you buy for your business and that cash back can add up to thousands of dollars which you can reinvest back in your business. So you can keep growing. Imagine what unlimited two percent cash back could do for your business. Learn more Capital, one dot com. What's in your wallet.

From wondering I'm David Brown, and this is business wars. On the last episode. Kellogg's found itself besieged by serial clones, just as a craze for oats Crown General Mills America's new breakfast king, now Kellogg's Ceo Carlos Gutierrez is going after general mills lucky charms in a battle for the top spot

is up against strong headwinds because America's been losing its taste for breakfast cereal. This is episode, six going soggy. It's. Two thousand and one and hundreds of Kellogg's stock holders are filing into the Wk Kellogg Auditorium in downtown battle. Creek as they enter the art Deco Concert Hall. They see illustrations of two enormous cartoon characters on the stage backdrop on the right, is the ever exuberant Tony. The tiger next to him is the company's newest Mascot Ernie, the elf that Chevy cheek face of Kellogg's latest acquisition, Keebler foods giant behind Cheez its as the stockholders settle into the auditorium's purple Upholstered seats Kellogg, Ceo Carlos Gutierrez walks at this stage in a smart navy, blue suit, he's feeling upbeat

hm. Mrs general. Mills might still be ahead in cereal sales Gutierrez sees the four point: four billion dollar purchase of Keebler as a turning point. He steps up to the Elect and begins his annual address The killer deal signals the beginning of a new Kellogg's, a Kellogg's, with a very different product portfolio he's right before buying Keebler Seventy percent of the company's sales came from breakfast cereal now is just forty percent Kellogg's is no longer a cereal company? It's a convenience food titan, but Gutierrez not forgetting the company's roots. Today, it is a tough market. Cereal is losing sales to yogurt to breakfast. Which is to be Bagels, two granola bars and even to know, breakfast at all, but

feel is not yesterday's category, I believe serial can come back. That's why we bought Koshi that why we're out to revitalize our US cereal business in the last year, we've stabilized our market share. Now we must fight to regain market leadership and that fight is already underway way. Light boxes of Kellogg's, latest cereal or arriving in stores across America, a SIRI that's already been a smash hit in Britain and France. A serial that taps into the is about antioxidant levels in red fruits, introducing New Kellogg's special k, red berries, cereal crunchy, sweet flakes now with slices of real strawberries right in the box, looking good, never tasted. So great Kellogg's special k, red berries, it's new, that's right, free

is dried. Fruit in cereal is back, but this time there's a difference in Dickey's manufacturers poured breakfast cereal right into the box, but now they The cereal in plastic bags that stop moisture from reaching the dehydrated strawberries and turning them slimy okay, red berries quickly becomes the company's biggest new product since rice Krispies treats in nineteen ninety three by spring two. One thousand and two the cereal is making more than one hundred million dollars a year. Putting Kellogg's back. Top of the serial league panicked general mills, scrambles to devise a fruit and grain counter strike it's march. Two thousand and three and a crush of middle aged women can barely contain their excitement as '

crowd around a small open air stage at the Florida Strawberry Festival in plant city on the stage right in front of them is David the 1970s teen heartthrob from the musical sitcom, the Partridge family he's decked out in an open neck? Black shirt and tight blue jeans but he doesn't have the stage to himself with him. Are two actors: who've traded dignity for dollar One twirls around the stage, dressed as a giant freeze, dried strawberry. The other is decked out as a seven. The tall Cheerio in a bow tie and dress shirt. Cassidy brings there Austin Strawberry, an oversized out who face to face and winks at the crowd. We are gathered here today in the present these witnesses to join Cheerios and strawberries together in breakfast matrimony now pronounce you berry, Burst Cheerios.

The tongue in cheek marriage ceremony is part of a forty million dollar push to make berry burst cheerios and breakfast favorite. There so tv ads were Cassidy's chart topping hit. I think I love you plays under scenes of a yellow, Cheerios Box Van and a pickup truck full of strawberry rates falling in love and strawberries have. Finally, gotten together real strawberries together with those classic goes for a taste, you can really fall in love with news in both strawberry and triple berry berry Burst: Cheerios helps lift general mills, cereal sales, seven percent, but that's not to overtake Kellogg's into town, in five Gutierrez.

Leaves Kellogg's to become President George, W Bush's commerce secretary by then, company owns thirty four percent of the US cereal market, a full two points ahead of general mills and a good chunk That success is thanks to Kashi kelloggs, but because she was making just twenty five million dollars a year, but now Kellogg incognito natural cereal brands going Supernova by two. Five it's making. A hundred million dollars. Two years later, the figure doubles to six hundred million dollars 'cause she's, a rare success story in a serial market. That's gone soggy as people switch to Egg Mcmuffin pop tarts other eat. On the go breakfast and that's made some managers inside Kellogg's battle, Creek headquarters, green. With envy they resent how the Koshi folks get free reign to do there,

something out in La Jolla, while they struggle to squeeze growth out of mature brands like corn, flakes and frosted flakes they'd love to have Koshy's numbers included in the ledger for their corner of the Kellogg's empire. Soon, battle, creek manager, start interfering with KA she's. Autonomous operation, where, before she could rush out new products to capitalize on the latest trend that now has to jump through bureaucratic hoops. Then in two thousand and eight. The grip tightens further. She is told that the Kellogg Salesforce in Battle Creek will take over the ask of selling its products to stores one cashier. Executive calls. Kellogg CEO David Mackey, and begs him to veto the plan. This The real bad move you can have the people who sell fruit loop, selling, our cereals, they got zero

connections with health, food stores and the buyers at whole foods. Mac he's got the bigger picture. It's mine in the middle of a billion dollar global cost cutting program. Integrating our sales force obvious saving. We don't need to sales teams when one will do by twenty Koshy's growth spurt is over Bibles are now beating Koshi the market with new cereals that tap into the latest. Fads among the whole food set research is causing people to cut back on luxury cereal. On top of that, employees who enjoy the cool startup, Vibe Koshi once had or moving one and there's more trouble ahead. It's April two twelve

and in Portsmouth, Ri John Woods, lugging a wooden crate through the greengrocer, the natural food store he co founded five years ago. Normally this bushy bearded businessman's a cheery guy, but today he's in a bad mood. Last He found out because she uses genetically modified soybeans in its cereals and for wood and his customers, genetic engineering is a serious. No, no so he's taking action. He reaches the cereal aisle and pulls box after Box of Koshi into his crate. Soon, these customers gather in front of the empty shelf, one reads: posted sign allowed to the group you Might be wondering where your favorite cereals have gone. It has recently come to our attention. One hundred percent of the soy used in Kashi Products is

medically modified genetically modified. She greengrocers customers are shocked. They've been. Gene caching for years thinking it's GMO free, even though the box, makes no such claim some steamers, take photos of woods sign on their smartphones and post them on Facebook. Within days, woods banishment Koshy is national news a cuss or snap a picture of this sign and posted it to the Koshi Facebook page. Many users responded frustrated, one writing cautious ads are misleading and they should totally boycotted for being so deceitful all these years and other rights. I'm disgusted I've pager your He and prices, and actually recommended caution to loved ones, never again 'cause. She gets up Pr disaster for Kashi the revelation infuriates Kashi fans who reject the evidence suggesting genetically modify. Crops are safe. On top of this, they are fine

me up at the hip cereal they've, been buying is actually made by Kelloggs the Houma Frosted Flake Eggo Waffles, Pringles and pop tarts. They feel like they've, been duped. Koshy lurches into damage control. It pledges to eliminate genetically modified ingredients from its cereals by the end of two thousand and fourteen, but the damage is done two hundred million dollars worth of sales are gone in a flash. It's a sharp lesson for the serial giants that even in Vogue brands can see the ground collapse beneath them as more values, change, conscious, organic image used to be enough, but as anti GMO sentiment rises, falling behind the latest trend and with general mills in Kellogg's market, share neck and neck again. It seems like

the route to victory depends on adapting fast to the latest consumer health trends. But as general mills is about to discover customers can be a contradictory bunch support for busy. Voice comes from T mobile for business. With T mobile for business, you can Your business connected with twenty four slash, seven expert support and that's important, because we know that business is changing fast. I mean, let's face it. Your working This is pretty much wherever you are right now, so, whether you're collaborating from the corner, shop or the corner office, your living room or the conference room. T mobile has the tools to keep you covered. That includes data texting in over two hundred countries and destinations at no extra cost and because business doesn't stop at thirty thousand feet.

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start enjoying the ad free wondering that work experience, that's stitcher premium com, slash wondering and promo code wondere. It's spring Thirteen and in general Mills headquarters in Golden Valley. Minnesota executives are grappling with a cereal conundrum. The riddle is, if p abandoning cereal for foods. They think are healthier. Why is lucky charms selling better than ever. The marshmallows and sugared oats cereal is bucking. Every market trend, last year. Sales jumped nine percent, and most of the boost came from the adults who now account for forty percent of the people devouring lucky charms to decide, the mystery, a woman from the

open ease. Consumer insights department shares her analysis, consume food values change constantly. But when you cut Through all the noise. Messages that people want their food to be real. They want. Feel free from synthetic dyes and artificial flavors, and they want to be able to pronounce and recognize. What's on the ingredients list. Cereal chief, Jim Murphy asks a question How does this square with more and more adults eating lucky charms? Are we look? There are two types of consumer: That's the really interesting thing: they're the same consumer they might eat. Greek yogurt in the morning, because they start the day feeling virtuous, but by bedtime. They might snack on cinnamon toast crunch because they feel they've earned a treat time. Day mood and context. All of that matters. I could spent hours debating how to respond to these findings

talk of running lucky charms ads late at night to reel in adults knackers. They agree accelerate plans for gluten free Cheerios and they won? just how much sugar they can cut out of their cereal before consumers reject the taste finally Murphy Zeros in on the question of artificial ingredients, given the trend I can't see a future for artificial colors and flavors in our cereals. How listing. Is it to remove those ingredients? Cereal developer? Gallagher replies, it'll, be tricky using natural ingredients to replicate the vivid, colors and fruit flavors of a serial like tricks, will be a serious challenge. Murphy rubs his stubbly chin for a moment, and then replies We should try all the same like to remove artificial ingredients for most if not all, of our cereals

Two years later, in early two thousand and fifteen Murphy's in the general mills test kitchen sitting in a faux wood, countertop and staring to a bowl of all natural tricks. It's a far cry on the day, Glo Cereal loved by millions, while purple, yellow and orange corn. Pops could pass for the original. The reds aren't as bright Blue red, green and turquoise hues are no to be. Singing. Gallagher in a white lab coat holds her breath, as Murphy digs into his bowl of Trix. She and her call Thanks have spent months making tricks natural they've experimented with hundreds of recipes they've tried and rejected colors made from spinach, beetroot and tomato an at every step. It had make sure that the new colors and new flavors don't counteract each other, but now

After months of experiments, she thinks they've done it question is, will Murphy agree. Murphy finishes his mouth full and gives Gallagher a thumbs up tastes really close to tricks to me. Well done What are you using for the colors like yellow, is turmeric. Orange is annatto, extract, a purple is a mix of blueberry strawberry, an radish choose, the reds are radishes and purple carrots carrots. Tricks is rabbit will not be pleased, so you This might be the recipe yeah yeah. I do we need to hear how the taste test go, but could be the one and it is in June, two thousand and fifteen general mills stuns serial fans by Bouncing it's stripping artificial ingredients from tricks and Reese's puffs as part of a

edge to eliminate artificial ingredients from ninety percent of its cereals by two thousand and seventeen Turning now to a health alert this afternoon of big change for some of the best known breakfast cereals after decades on the market, general mills is recreating its recipes, minus the artifice ingredients ABC's, Make a Jarvis got an exclusive look at some of those healthier choices. Natural tricks is a hit. Tricks lovers, who abandoned the serial over its artificial ingredients, come back to the fold. Raising sales. Six percent by Aug Kelly is playing catch up, sing to remove artificial ingredients from fruit loops by two thousand and eighteen, but Not everyone. One over by tricks is NASH, transformation. Tricks, loyalists lobby General mills to bring back the dazzling breakfast. They grew up on barrage company with emails and social media commentary in

seventeen they get their way and a blast from the past. You will soon be able to pick up a the original trix cereal from your local grocery store, the colorful cereal again be made with artificial dyes and flavors nearly two years. After they were banished from the box. The general mills is abandoning the natural version. Instead, the company to sell both the classic and natural tricks which results, a massive sixty percent boost to sales. Both general Mills and Kellogg's take it as a sign that even in age of omega three raisin bran and Ancient grain Cheerios. Still life in candied cereals. The following year, Kellogg's tries winning over the candy crowd with chocolate. Frosted flakes general mills start sprinkling unicorn marshmallows into boxes of lucky charms,

but whether the serial giants are trying to woo the sweet, toothed or appeal to the health conscious they're, both desperately trying to defy gravity since the dawn of the new century, the? U S, markets, gone soggy in two thousand serial was a fourteen billion dollar business. Today, it's worth just and a half billion dollars Retailers like Walmart or scaling back cereal shelf space, for general mills in Kellogg's, it's no longer about who can grow fastest. It's about who can fall. The slowest as more and more of us abandon the breakfast bowl but even as their cereal riches, with these giants far from dying on the vine just check the aging of the cereal bars breakfast shakes, yogurt cups and toaster pastries. These products be eating away at the cereal business, but there's,

a very good chance that you were starting your day Kellogg's and general mills from Andrea. This is business wars and I hope you enjoyed this series. We invite you to subscribe on Apple podcast, Spotify, Google, podcast stitcher, I heart radio. Over ever you get your podcast you'll, find a link on the episode notes, just tap or swipe of the cover, art and you'll see some offers from our sponsors. We hope you'll support our show by supporting them. If you like you've been listening to. It would be great if you give us a five star rating and tell your friends subscribe while you're at it there's another You can support us, go over to wondere dot com, slash answer a few questions. Don't forget to tell us what this war stories, you'd like to hear a quick note about the conversations in this episode. We can't know exactly what was said sometimes, but this dialogue is based on our best research. I'm your host

the Brown Tristen Donovan wrote this story. Karen Lowe is our senior producer and editor Donna hi and scan it to the store. Our editor producer is Jenny, Lauer Back sound design by Bay Area, sound our exact producers, Marshall created by or Non Lopez for one.