Cereal producer's large diary kept in barrel (7)
I believe the answer is:
kellogg
'cereal producer's' is the definition.
(breakfast cereal manufacturer)
'large diary kept in barrel' is the wordplay.
'large' becomes 'L' (eg in clothes sizes).
'diary' becomes 'log' (log can mean a record or diary).
'kept in' means one lot of letters goes inside another.
'barrel' becomes 'keg' (keg is a kind of barrel).
'l'+'log'='llog'
'llog' going inside 'keg' is 'KELLOGG'.
(Other definitions for kellogg that I've seen before include "Cornflake inventor" , "Will Keith ___ , US breakfast cereal pioneer, d. 1951" , "Will Keith possibly" .)