The cold cereal market has been facing challenges as consumers increasingly opt for more convenient breakfast alternatives like yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research from IBISWorld shows that from 2009 to 2016, cereal sales dropped by 17%. Millennials, in particular, tend to view cold cereals more as snacks than as traditional breakfast items, prompting manufacturers to reconsider their strategies.
In response to these trends, General Mills announced in 2016 that it would focus on creating snack-friendly formulas. That June, the company introduced Tiny Toast, marking its first new cereal brand in 15 years. The shift towards cereals being consumed as snacks or late-night treats has also led to a revival of sugary cereals, such as Post’s Oreo Os, which made a limited-time comeback last summer after a decade-long hiatus.
With snacking in mind, manufacturers are discovering that sweet-heat flavor combinations may not be as unconventional as they once thought. The sweet heat trend has already gained traction in the snack industry, with products ranging from sweet chili potato chips to sweet and spicy Asian barbecue. This trend is also evident in candy, with offerings like Sweet Heat Skittles and Sweet Heat Starbursts featuring flavors such as Fiery Watermelon and Flamin’ Orange. However, navigating new food and flavor trends poses challenges for cereal makers, as consumers increasingly demand low-sugar, highly nutritious breakfast options.
To meet these expectations, manufacturers are phasing out artificial ingredients and colors, reducing sugar content, and launching new products incorporating ancient grains, superfoods, and enhancements like probiotics and protein. Despite this, iconic brands like Lucky Charms continue to thrive. Manufacturers should take heed of General Mills’ experience with its naturally colored Trix cereal, which faced backlash when consumers found the muted colors “depressing.” As a result, General Mills reintroduced the original artificially colored formula alongside the healthier version.
Ready-to-eat cereals are still carving out their niche between health and indulgence. By experimenting with a variety of flavors that are both healthy and indulgent, brands can maintain cereal’s relevance as a breakfast or snack option. A crucial strategy for cereal brands seeking growth lies in identifying the specific occasions for which their products are purchased and innovating accordingly. Flavor differentiation will be key, especially as consumer tastes evolve. A more complex flavor profile could enable a product to achieve premium positioning, allowing manufacturers to charge higher prices.
Additionally, incorporating ingredients like calcium citrate, magnesium, and zinc can enhance the nutritional profile of cereals, appealing to health-conscious consumers. By focusing on these enriching ingredients while also embracing innovative flavors, cereal brands can successfully navigate the changing landscape of breakfast and snacking preferences.