The cold cereal market has faced challenges as consumers increasingly opt for more convenient breakfast choices, including yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Between 2009 and 2016, cereal sales fell by 17%, as reported by research firm IBISWorld. Millennials, in particular, tend to treat cold cereals as snack options rather than traditional breakfast items, prompting manufacturers to reevaluate their strategies. In 2016, General Mills announced its intention to “focus on formulas that are increasingly snackable,” and later that year, they introduced Tiny Toast, marking their first new cereal brand in 15 years. The shift towards consuming cereal as a snack or late-night treat has led to a revival of sugary cereals, such as Post’s Oreo Os, which made a limited-time comeback last summer after being off the shelves for a decade.
With snacking in mind, manufacturers may find that sweet-heat flavor combinations are more promising than they initially seem. This trend has already made waves in the snack aisle, with products like sweet chili potato chips and sweet and spicy Asian barbecue snacks gaining popularity. It has also made its way into the candy market, with offerings like Sweet Heat Skittles and Sweet Heat Starbursts featuring flavors such as Fiery Watermelon and Flamin’ Orange. However, pursuing new food and flavor trends can be challenging, and cereal producers may find themselves in a particularly tough spot. Consumers are increasingly seeking low-sugar, highly nutritious breakfast options. In response, manufacturers have begun removing artificial flavors and colors, decreasing sugar content, and creating new products featuring ancient grains, superfoods, and value-added ingredients like probiotics and protein. Despite this, brands like Lucky Charms continue to thrive.
Cereal manufacturers should also take note of General Mills’ experience with its naturally colored Trix cereal. After many consumers criticized the new version for its dull colors, labeling them as “depressing,” General Mills reverted to its original artificially colored formula, offering both options to consumers. Ready-to-eat cereal is still navigating its position between these two contrasting worlds. Experimenting with a variety of healthy, innovative, and indulgent flavors may provide a way to appeal to both segments and maintain cereal’s relevance, whether for breakfast or as a snack.
The key to growth for cereal brands lies in identifying the specific occasions for which their products are purchased and innovating accordingly. Flavor could be a significant differentiator in this regard, especially as consumer preferences become more sophisticated. A more complex flavor profile could elevate a product’s status, enabling manufacturers to command higher prices. Additionally, integrating health-conscious elements, such as calcium citrate chews from CVS, could further attract health-focused consumers. By incorporating such products into their offerings, cereal brands can enhance their appeal and address the evolving demands of today’s market.