The world's largest cereal manufacturer reported a 1.7 per cent drop in fourth-quarter earnings following a 1 per cent revenue drop and a 1.4 per cent fall in volumes.

But Kellogg's has been quick to defend the drop stating that driving the company brand through advertising investment was paying off.

President and CEO David Mackay said: "Our belief in advertising is that we have to invest in our brand to keep the brand equity strong, continue to reinforce the value, the quality of the products we sell - particularly in an environment where consumers need to be reminded of these things on an ongoing basis.

"Strong advertising and brand building is a fundamental part of our beliefs that underpins our ability to drive sustainable and dependable performance, so that's something you're going to see every year."

Mackay argued that investing in advertising had allowed Kellogg's to stave off pressure to drive down prices and rely on promotional activities.

CEO John Bryant blamed the changing mix in China and Russia as well as issues at Kellogg's Eggo frozen waffle business in Atlanta, US, caused by flooding, on the decline.

He added: "In both China and Russia we're trying to move our business to a higher margin, to premium packaged foods business from lower margin or bulk business. What that is doing actually means that we are moving away from some pretty big chunks of volume."