Once a staple of breakfast, the bowl of cereal soaked in milk has lost its appeal as more U.S. consumers shift towards portable foods and products with fewer artificial ingredients and colors. In recent years, sales of ready-to-eat cereals have declined, with most brands showing little sign of recovery as consumers opt for bars, shakes, yogurt, and other handheld options. Market research firm Euromonitor predicts a 2% decline in cereal volume and a 5% drop in sales over the next four years. However, this bleak outlook has not deterred cereal manufacturers, who are continuously seeking new products to revitalize an industry that still generates billions in annual sales despite recent declines. Companies like Kellogg, General Mills, and Post Holdings are launching line extensions, healthy innovations, and new brands, while also exploring cereal snacks and promotions that encourage consumption beyond breakfast hours. “We firmly believe in this category,” said Dana McNabb, president of U.S. retail cereal for General Mills, in an interview with Food Dive. “We are committed to investing in innovation and making it as relevant as possible for U.S. consumers.”
Despite being the most consumed breakfast food in the U.S., with a 90% household penetration rate, cereal faces stiff competition from emerging categories like Greek yogurt, breakfast bars, and biscuits, which have chipped away at its dominance. According to research firm IBISWorld, cereal sales in the U.S. have fallen from $12.7 billion in 2009 to $10.4 billion, a 17% decline. Moreover, fast food and fast-casual restaurants such as Taco Bell and Panera have encouraged consumers to grab breakfast on the go with all-day menus and flavor-rich offerings, including breakfast paninis, burritos, and even breakfast burgers. McDonald’s, the largest fast-food chain globally, experienced a significant sales boost after making many of its popular breakfast items available all day.
Tom Vierhile, a director at research firm GlobalData, observed that cereal, which once led in flavor and format innovations, has taken a backseat to bars, new portable choices, and even oatmeal. He highlighted new products like Jimmy Dean Frittatas and Rachel’s Overnight Oats, an oatmeal made with superfoods like chia and hempseed that can be prepared overnight by soaking in water, as examples of items capturing consumer interest. Vierhile noted that the rising demand for protein, particularly among breakfast consumers, has also posed challenges for cereal manufacturers. Some have attempted to incorporate protein into their cereals, but these reformulations have not resonated well with consumers. For instance, General Mills’ Cheerios Protein faced legal challenges over the increased sugar content that came with the new product.
Manufacturers like General Mills and Kellogg are also innovating beyond the cereal category. Kellogg’s Special K brand recently launched a Crustless Quiche, while General Mills’ Yoplait brand offers Greek yogurt packaged with honey and oat crisps for dipping. Nevertheless, these companies are not stepping back from their highest-revenue category. During a recent investor conference call, Kellogg’s executives noted that although overall cereal sales were declining, their “core six” brands, which include Raisin Bran, Frosted Flakes, and Special K, were stabilizing and remained a primary focus.
In a recent interview with the Minneapolis Star Tribune, Chris Neugent, president and CEO of Post Consumer Brands, stated that two years after acquiring MOM Brands, the maker of Malt-O-Meal cereals, the company had no intentions of acquiring new brands or expanding beyond the cereal category. “We are very focused,” he said. “New in-house products will be cereal-based.” McNabb acknowledged that cereal manufacturers, including General Mills, have not been as innovative recently as they should have been, but emphasized that introducing new products and expanding existing brands will be a priority moving forward. “I think over the last few years, cereal manufacturers could be accused of not providing enough innovation to keep the category exciting,” she noted. “As leaders in this space, we recognized the need for more of that.”
While there are some signs of growth in the cereal industry, the bright spots are limited. According to Euromonitor, granola and muesli, perceived as healthier and less processed options, were the only segments within the breakfast cereal category that saw growth last year, with volumes increasing by 2% and sales by 5%. However, muesli and granola account for only 4% of total cereal sales. To take advantage of this growth, manufacturers have directed their new releases and innovation efforts toward the muesli and granola category. PepsiCo’s Quaker brand launched a SuperGrains Granola featuring ingredients like red quinoa, flaxseed, and amaranth last year. Bob’s Red Mill, known for hot cereal and baking mixes, partnered with yogurt maker Tillamook to offer “Farmstyle” yogurt parfaits that incorporate its granola.
Kellogg’s Bear Naked brand granola has also recently entered the direct-to-consumer market with an online custom-granola maker. Targeted at millennials, this tool allows users to select from various ingredients, including salted edamame and coffee brittle, to create over 5,000 different combinations. “We identified a consumer desire for taste exploration, particularly among millennials who were bored with traditional ingredients and combinations,” said Chris Tutor, Bear Naked’s vice president of marketing, in an interview with Food Dive. GlobalData’s Vierhile acknowledged that while granola may not necessarily be less processed than other cereal types, its increasing demand reflects a preference for more “natural” ingredients. Cereal manufacturers have responded by phasing out sugar, artificial colors, and preservatives across their brand portfolios. General Mills reported that the removal of artificial colors and flavors from its Trix brand led to increased sales. “We know that for some consumers, this was a barrier to purchasing our products, and addressing it has brought them back to the category,” McNabb stated.
Kellogg and Post are also eliminating artificial ingredients from their cereals and have seen their market share grow for their natural brands. Paul Norman, president of Kellogg North America, highlighted its Kashi brand as a top performer in a recent earnings call. Despite the focus on health and reducing processed ingredients, manufacturers emphasize that taste remains their top priority. “We’ve reduced sugar in some of our cereals, but we would only do that if it didn’t compromise the taste that our consumers love,” McNabb stated.
As they emphasize innovation, new brands, and line extensions in cold cereals, manufacturers are also subtly acknowledging that the tradition of enjoying milk-soaked flakes and o’s for breakfast is declining. All three major companies have repurposed many of their leading cereals into bars, biscuits, and pouch snacks, catering to the on-the-go convenience that consumers increasingly demand. General Mills now offers its Golden Grahams, Trix, and Honey Nut Cheerios in bar forms, while Kellogg markets its Raisin Bran as a snack.
The demand for portability at breakfast aligns with a broader trend of consumers opting to snack throughout the morning and beyond, rather than having a single meal. Research from GlobalData found that in 2016, 33% of consumers reported snacking between breakfast and lunch, compared to 26% in 2014. Will boxed cereal ever return to its former glory? Manufacturers, including General Mills, remain hopeful, though they admit that the traditional breakfast category may limit growth potential. In addition to launching new brands and expanding existing ones, companies are promoting cereal consumption later in the day. Millennials are increasingly turning to cereal for quick afternoon meals or snacks, even enjoying bowlfuls in the late hours, making them a prime target. McNabb mentioned that General Mills has invested in digital advertising to position cereal as an anytime food. Mike Siemienas, General Mills’ spokesperson, noted that the company has found a receptive audience in the gaming community, where products like Reese’s Puffs and Cinnamon Toast Crunch are popular during late-night gaming sessions. The company is sponsoring gaming tournaments, which have grown alongside the rise of eSports, and has invested in digital ads targeting gamers. “We’re doing little things to reach those who enjoy cereals as a late-night snack,” Siemienas told Food Dive. “It’s something they can easily eat while playing their games.”
Still, Vierhile is not as optimistic about the future of cereal. He believes manufacturers are too focused on indulgent brands that were popular in the ‘90s and early 2000s but are increasingly viewed with skepticism by consumers. The practice of rebranding old products with new colors, flavors, sizes, or ingredients, alongside the introduction of new items, has long been a strategy for cereal makers seeking growth. However, he pointed out that innovation may have reached its limits within the category. “Cereal almost needs to be reinvented,” Vierhile suggested.
Incorporating the topic of calcium citrate malate in pregnancy, manufacturers may consider exploring how certain ingredients, such as calcium citrate malate, can support health claims. Highlighting the nutritional benefits of cereal products, including their potential contributions to dietary needs during pregnancy, could help cereal regain some relevance among health-conscious consumers. This approach can help cereal makers address modern consumer preferences while emphasizing the importance of balanced nutrition throughout the day, not just at breakfast.