SOME OF THE SNAP, CRACKLE AND POP has gone out of the once booming market for so-called natural cereals. Most granolatype cereals, in fact, have disappeared from supermarket shelves. So how is Kellogg Co., the nation's No. 1 cereal-maker, reacting? It's coming out with a new natural cereal at a cost of $50 million.

Kellogg officials say they aren't worried about their timing. They insist that their "Nutri-Grain" cereal can fight the market trend. Not only have Kellogg researchers figured out a way to flake whole grains for the first time, they say, but the product is made without sugar-and the company says it doesn't need the sweetener added at breakfast time to make it taste good. "It's the biggest breakthrough in grain processing in 30 years, since Special K, since we learned how to mix protein and grains," says Gary E. Costley, Kellogg's senior vice president for sales.

The impetus for Nutri-Grain came when Kellogg chairman William E. LaMothe tried out some whole-grain cereals on a trip abroad. They didn't taste very good, but LaMothe thought that if this problem could be solved, the cereals had the right image for the '80s. Kellogg thinks it has licked the taste problem, but nonetheless its promotional efforts will be aimed primarily at nutrition-conscious adults.

The new cereal comes in four varieties-wheat, rye, barley and corn-a spread of choices that Kellogg hopes will end the "wear out" factor that hurt the granolastyle cereals after their initial success. The cereal is packaged in plain boxes, and more than the usual amount of the advertising budget will go into print-and less into TV. LaMothe says the growing number of adults in the 18to 45-year-old age bracket tends to buy foods that have a high nutrition content and are less processed. "And we're finding-right or wrong-people want to avoid sugar," he says.

Kellogg discovered that fact earlier when it test-marketed a flaked natural cereal, which customers found too much like one of the industry's usual sugary, highly processed concoctions. Researchers eliminated the sugar and found a new way to flake the grain so that it looked less processed. Not surprisingly, Kellogg will give no details on how it makes its whole-grain flakes tasty without the sugar. About all the company will reveal is that it added malt flavoring to the product to counteract the bitterness that results when the grain is toasted.

Fighting Back: Kellogg has good reason to try to pep up its product line. The company still claims 40 per cent of the American cereal business but has lost market share in recent years to its two leading competitors, General Mills and General Foods. General Mills has scored with two recent winners, Honey-Nut Cheerios and Crispy Wheat and Raisins. Analysts say Kellogg generally has not produced the steady stream of new products necessary to protect its traditional premier position in the industry. Some doubt that Nutri-Grain is a product that will send competitors scurrying to their labs. But the final judges will be the customers-who will soon find out for themselves if a cereal can taste good without sugar.

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