BATTLE CREEK, Mich. — It was 1894, and the chief physician at the Battle Creek Sanatorium and his younger brother were experimenting in the hospital's kitchen, trying to create a better-tasting replacement for the nutritious but bland bread served to patients.

Instead, Dr. John Harvey Kellogg and William Keith Kellogg ended up accidentally inventing flaked cereal. The discovery eventually led the business-savvy "W.K." Kellogg to establish what is now the Kellogg Co., which marks its 100th anniversary today.

The business has grown into the world's largest maker of ready-to-eat cereals, with net sales of $10.2 billion in 2005. Its products, including Rice Krispies and Special K cereals, Eggo frozen waffles and Keeb-ler cookies, are marketed in more than 180 countries.

While founder W.K. Kellogg was a firm believer in healthy nutrition and exercise, his company has come under fire for selling sugary cereals to children and contributing to the growing epidemic of obesity in America.

Kellogg and its largest U.S. competitors — General Mills Inc., Kraft Foods Inc. (maker of Post cereals) and PepsiCo. Inc. (Quaker Foods) — have long emphasized the importance of good nutrition in their cereals and other breakfast products, fortifying them with vitamins, minerals and fiber.

Now, they are in a race to find new ways to improve the nutritional value of their products — and new ways to market them.

In fall 2004, General Mills, the nation's No. 2 cereal maker, announced that all of its cereals would be made from whole-grain flour, which is healthier than the wheat flour or refined corn meal used in most cereals.

Earlier that year, General Mills and Kellogg started using less sugar in some of their children's cereals.

Last December, Kellogg announced that it will start using oil this year made from genetically modified soybeans in place of the partially hydrogenated oil and saturated fats found in some of its crackers and snacks. The soybean oil may also be used in some frozen foods.

The oil, called Vistive and developed by St. Louis-based Monsanto Co., contains no trans fatty acids or saturated fatty acids. Studies indicate that these two types of fatty acids contribute to higher levels of "bad" cholesterol, which can increase the risk of heart disease.

"It's becoming increasingly common knowledge that trans fat is as bad for you as saturated fat," said Gale Strasburg, a food chemist who is chairman of the Department of Food Science and Human Nutrition at Michigan State University. "Some would argue it's even worse."

With the first baby boomers turning 60 this year, Kellogg is developing products for older, health-conscious consumers aimed at strengthening bones and even improving memory, said Donna Banks, who heads up the company's research and development.